James Monroe's Blog

Mortgages for People with Disabilities: Community HomeChoice Mortgage

Kay Francis Woods — Wed, 20 Nov 2013 04:28:45 -0800

Federal National Mortgage Association (Fannie Mae) designed the Community HomeChoice mortgage product for people with disabilities or with family members who have disabilities who have low to moderate income. This is a single family mortage loan program. The program offers flexibility in terms of loan-to-value, credit history, down payment sources and qualifying ratios. The process of obtaining a mortgage through the program can be overwhelming. Many lenders work with organizations that serve people with disabilities. Contact a housing counselor at the Detroit Public Housing Commission by calling (313) 887-8000 or visiting 1301 E. Jefferson, Detroit MI. Someone may be able to assist with the application process. The following are key components of the Community HomeChoice mortgage product.Who is Eligible?Any low- or moderate-income person defined as handicapped by the Fair Housing Amendment Act is eligible for the Community HomeChoice mortgage. People with disabilities must:self-identify according to the definition of disability or prove your source of income is consistent with having a disabilityIncome The borrower must have a history of receiving regular income from employment or other sources and that there is an expectation that the income will continue, generally at least 3 years. An eligible borrower’s income may not exceed 115 percent of the area median income (AMI) where the property is located.Co-borrowersAll co-borrowers must sign the note. In determining eligibility for a mortgage, the combined incomes of occupant co-borrowers may not exceed the AMI, except as described above. When a traditional or nontraditional credit profile cannot be developed for an occupant co-borrower, up to 30 percent of the total qualifying income can be used toward the mortgage payment. An occupant co-borrower does need not be related to the disabled borrower. A non-occupant co-borrower may be part of the transaction, provided the occupant co-borrower is a disabled person who meets the income restrictions, and the non-occupant co-borrower is a family member or legal guardian.Down Payment The minimum down payment is three percent based on the lesser of the sale price or appraised value. At least $5,000 must come from the borrower’s own funds. The balance of the down payment may come from grants, gifts or grant-like subordinate financing.Eligible Mortgages Fannie Mae accepts 30 years or less fixed-rate, fully amortizing, level payment mortgages, 7/1 ARMs and negotiated 10/1 ARMs. There is no minimum loan amount, and the maximum loan amount is Fannie Mae’s standard conforming loan limit. Click HERE to visit the Conquest Real Estate Group Website

Questions You Should Ask Before Selecting A Mortgage Lender

Kay Francis Woods — Sat, 16 Nov 2013 07:26:55 -0800

Before visiting a prospective mortgage lender, it would be a good idea to write down pertinent questions so that you will be able to decide whether or not this lender is appropriate for you. The following are basic queries that are suggested, in one form or another, by most lending institutions. 1. What will my interest rate be?Although most lenders will charge almost identical rates, they can vary by a wide margin, especially in instances where the borrower does not have a perfect credit history. This question should be at the forefront of everyone’s list. 2. Can I lock in this interest rate?Most institutions allow a borrower to lock in the interest rate for a fee. 3. If my loan is approved, will the interest rate ever change during the life of the loan?In the past many people thought they were getting a good deal when they obtained a sub-prime rate, only to find out later there was an explosive increase when interest rates suddenly rose. 4. How much will the closing costs be?The total amount for closing costs varies by institution, but it is a good idea to know this amount in order to plan the rest of your budget. Lenders provide this amount to you within three days of application. 5. Will I have to pay for discount or origination points?A lender will be required to provide you with the answers to this question. Often it is to your advantage to pay these fees as they can result in a lower interest rate being charged. 6. Do I qualify for any special programs?A good example would be for Veterans Administration loans or loans for first time home buyers, etc. 7. How much will my monthly payment be for principal, plus interest plus any additional costs for taxes and insurance?This question is undoubtedly the most important one on the list. A surprising number of people in the past have lost their homes because they could not afford the total monthly payment of all costs. Make certain you know this figure and are comfortable with it.Since the aforementioned suggested questions are very basic, it would be ideal if you added others that are pertinent to you. Much online help is available for home buyers. A good starting point would be to visit: http://portal.hud.gov/hudportal/HUD?src=/program_offices/housing/sfh/buying/buyhmClick HERE to visit the Conquest Real Estate Group Website

Overview: Programs That Make it Easier for People to Buy Homes

Kay Francis Woods — Wed, 13 Nov 2013 21:34:26 -0800

Buying a home can be especially challenging for people with disabilities. Many have difficulty qualifying due to low income or little money for a down payment. One in three persons with a disability lives at or below the poverty level. This makes it challenging for lenders to qualify a disabled person for a traditional mortgage. Don’t let this stop you. The following programs and organizations may be able to help. Section 8 - The Home Ownership voucher program The US Department of Housing and Urban Development (HUD) offers Section 8, Housing Choice Vouchers to assist low and moderate income individuals with disabilities get homeownership or adequate rental housing.Section 8 can be viewed as a subsidy program due to the limited income of many disabled people. If you are currently on Section 8 contact the Housing Specialist assigned to your account for more information about the Section 8 Homeownership program. Fannie MaeFederal National Mortgage Association (Fannie Mae) offers many mortgage products and initiatives to provide homeownership opportunities for people with disabilities or with family members who have disabilities. A popular mortgage is the Community HomeChoice mortgage. This is a single family mortgage loan program designed for low-to-moderate income persons with disabilities, or for a person who has a family member with a disability. The program offers flexibility in terms of loan-to-value, credit history, down payment sources and qualifying ratios. The process of obtaining a mortgage through the program can be overwhelming. You may want to see a housing counselor at the Detroit Public Housing Commission at (313) 887-8000 or 1301 E. Jefferson, Detroit to complete an application. The N.O.A.H. FoundationThe National Opportunities for Affordable Housing Foundation, or N.O.A.H., is a nonprofit agency that educates buyers and has a special focus on affordable housing and assistance with downpayments and closing costs. Email them at FreeMoney@NOAH-DPA.org Homes for Our Troops This is a non-profit organization that provides individually adapted homes for severely injured, and disabled veterans at no cost. The program is supported by donations from cooperate building industries, and commercially organized donors. Visit https://www.hotusa.org. Habitat for HumanityThe nonprofit Habitat for Humanity builds accessible homes for the disabled and other people in need. Homes are constructed by volunteers and recipients get favorable mortgage loans that are cosponsored by private donations and a variety of local, private, state and federal resources. Go to http://www.Habitat.org for more information. Homes cost much less due to the volunteer labor.Call Conquest Real Estate Group for More Info: (248) 569-1486

Down Payment Comparison: FHA Loans vs. Conventional Loans

Kay Francis Woods — Tue, 12 Nov 2013 21:43:05 -0800

Why do people make such a big deal about being able to qualify for an FHA Loan? Actually, that is a great question, because the loan backed by the US Federal Housing Administration (also known as the FHA Loan) allows a lot of people to afford to buy a home that otherwise could not.What is an FHA Loan? An FHA Loan is not actually a loan at all. It is insurance...on a home loan. Well...THAT was not very helpful! We need a LOAN--not insurance. Can we try explaining that again? Yeah, you're right. Let's try explaining FHA Loans a little better than that.Owning a home is nice, but it's so scary (to some people). The US Government recognizes that the economy is stronger with a middle class, and one key part of becoming and sustaining middle class status and finances is HOME OWNERSHIP. The US Government wants people to own homes. Amongst other reasons, most people (including the government) believe that higher home ownership rates help stabilize the economy. What is the scariest thing about buying a home for most people? There might be a few answers... The first home is usually the most difficult for a person to get, because owning a home requires a different mindset compared with renting. There are different bills to pay, like home owners insurance, property taxes, and maintenance costs. Of course, for anyone taking out a loan, there also is a little thing called a mortgage (requiring those monthly mortgage payments). However, none of those is the BIGGEST concern for most home buyers. What is it then? THE DOWN PAYMENT! Even more intimidating for people buying a home is saving enough money to make a down payment on the house.Conventional Loans The US Federal Housing Administration (FHA) provides insurance on loans that lenders make. (NOTE: The lender must be FHA-approved.) The FHA is not actually a lender. It provides insurance on the loans that are made to cover some of the cost in case the borrower defaults on the loan (fails to repay the loan). To get a Conventional Loan on a home, a person usually needs to be prepared to make a down payment of, at least, 20% of the sale price of the house. Sale Price of Home: $60,000 Down Payment Required = 20% of $60,000 = $12,000 For most people, that's a lot of money. (It's even higher if you want to buy a home with a larger price tag in a pricier neighborhood.) Therefore, let's take a look at...FHA Loans To get an FHA Loan on a home, a person usually needs to be prepared to make a down payment of, at least, 3.5% of the sale price of the home (compared with 20% on a Conventional Loan). Let's put some real numbers on that to compare so that the impact of this difference is understood clearly. Sale Price of Home: $60,000 Down Payment Required = 3.5% of $60,000 = $2,100 Let's compare the down payments required...Conventional Loan = $12,000FHA Loan = $2,100 Which is easier to save enough money so that you can make that down payment? Of course, it's the $2,100 from the FHA Loan...In this example, it's easier for almost $10K. When you get this type of loan, it is actually "backed" by the US Federal Housing Administration. The FHA guarantees that the lender will be repaid a portion of loan, even if the borrower fails to pay for that loan. Because of that, FHA often has certain standards, and just like nearly everything else with the government, it is not a simple...nor quick...process. However, FHA Loans provide something very important. They provide many buyers a way to purchase a home by lowering the required down payment amount to a level where more people can buy. That's great for the buyer. The government backing is great for the lender. As long as most people repay their loans, that's great for the economy...which is great for the government...and us, too! Click HERE to visit the Conquest Real Estate Group Website for More Info

What is the difference between Mortgage Broker and Mortgage Lender?

Kay Francis Woods — Tue, 12 Nov 2013 05:01:26 -0800

Mortgage Brokers act as intermediaries between a prospective borrower and a lending institution. In most states the broker is required to be licensed consistent with the provisions of the Nationwide Mortgage Licensing System and can be liable for fraud during the entire life of the loan. He is normally paid by the Mortgage Lender for loan applicants with outstanding credit. For applicants with a troubled credit history or other issues which make the borrowing process more difficult, it is customary for the broker to charge extra fees directly to the loan applicant. There are several advantages for using an experienced mortgage broker. He has an in-depth knowledge of the varying requirements of different lenders. In a tight market he normally can find the best rate and most suitable lender for the borrower. Because he obtains financial information and clarifies potential credit questions at the onset, he can save the loan applicant much time.Most of the historical disadvantages of utilizing the services of a mortgage broker surround conflict of interest issues. Banks often pay brokers different rates for obtaining applications for diverse types of mortgages. A broker can have torn loyalties. Does he steer the applicant towards the lender who offers the best deal for the borrower or towards the lender who will pay the highest fee to the broker? The overwhelming majority of brokers are honest and serve the interest of the client first. A Mortgage Lender, on the other hand is the actual institution that loans the funds to the applicant for purposes of purchasing real property. Typically the lender employs a loan officer who works under the licensing umbrella of the institution. While the loan officer knows the requirements of his employer more comprehensively than a mortgage broker, his knowledge of the internal procedures and requirements of other institutions is relatively limited. Potential home buyers have used both mortgage brokers as well as lending institutions as their first step with success. For greater information regarding the use of mortgage brokers, visit: http://mortgage.nationwidelicensingsystem.orgVist the Conquest Real Estate Website

Predatory Lending: The Warning Signs

Kay Francis Woods — Mon, 11 Nov 2013 00:48:07 -0800

Although more Americans have been able to qualify for home mortgages during the past few decades, a growing problem has arisen which primarily affects minorities such as the elderly, people of color, the economically vulnerable, and people with language disabilities. This is the practice called predatory lending. There has been no completely accurate legal definition of what constitutes predatory lending, because there are so many ways in which people can be cheated. A consensus of the descriptions regarding this term appears to be “the unfair and deceptive practice of charging excessive or hidden fees during a residential home mortgage loan origination process”. Normally a predatory lender will mimic the language and practices of a conventional and completely honest lending institution, so it is critically important that the warning signs be quickly recognized and acted upon. Some of the more frequent practices of predatory lending are as follows:The overwhelming number of cases arise from sub-prime lending procedures. People who would have difficulty affording a conventional mortgage are told they will qualify at a lower rate, but they have to pay a few costs. Those extra costs can be as high as 500% as much as they would be with an honest lender.One example of this type of predatory cost is excessive insurance. While most lenders encourage, and often require insurance for the property that is being mortgaged, predatory lenders trick unsuspecting victims into purchasing insurance for life and disability, not only for the borrowers, but for their family members. Furthermore, they sometimes require the unnecessary premiums be paid three to five years in advance. Even some conventional lenders have prepayment penalty clauses written into their contracts, but the predatory lenders will take this procedure to its extreme limit, charging a 20% fee if the home is sold early. Although many banks offer “points” for a fee, they often limit the amount to no more than 3% of the loan amount. The predatory lender, on the other hand, often charges far more than that percentage. Additionally, the vulnerable borrower is not informed that his scheduled monthly payment does not include taxes or insurance, and increases the chances that he will not be able to meet his financial obligations and will lose his home. Sometimes even an unsophisticated borrower will detect that something just isn’t right about the loan origination process and catch a deceptive lender off guard. The normal response is an oral promise to refinance the mortgage at a later date. The old maxim of “get it in writing” holds true here also. The lender will be under no contractual obligation to refinance the loan unless it is in writing. All of the aforementioned deceptive acts have the same result. An unsuspecting person has to pay far more in fees than he would have to an honest institution, plus he puts himself at risk of losing his home if there is an explosive rise in the interest rate on his subprime mortgage. There are a number of laws protecting innocent borrowers. In Michigan, the Elliott-Larsen Civil Rights Act often has been violated under these circumstances. On the Federal level, the Truth In Lending Act and regulations of the Federal Trade Commission are salient. The U.S. Department Of Justice and the Department Of Housing and Urban Development also provide protection. Anyone believing they have been the victim of predatory lending should inquire with the proper authorities. For in-depth advice on this matter, visit: http://portal.hud.gov/hudportal/HUD?src=/program_offices/housing/sfh/pred/predlend Visit Conquest Real Estate's Website

What are the first steps I need to follow to buy my first home?

Kay Francis Woods — Sat, 09 Nov 2013 22:15:02 -0800

Purchasing your first home can be a mystifying and even frustrating experience unless you are equipped with the proper knowledge before you begin the process. Once you have some insight as to which steps to follow, and the proper sequence, the entire experience will be an enjoyable and rewarding one. Many people see a home they like, sign a purchase agreement while giving the seller a down payment only to find out they can’t qualify for a mortgage. The sequence you follow is extremely important. The first step is to calculate how much of a home you can actually afford. As a general rule of thumb, most lending agencies won’t approve a mortgage where the monthly payment exceeds 28% of your income. Look at homes you would like to purchase and determine the general price range. Then calculate how much the monthly payment for your dream home would be. You can perform this step by using online mortgage calculating tools such as those located at either http://www.mortgagecalculator.org/ or http://www.zillow.com/mortgage-calculator/ After you have figured out the monthly payment, see if it exceeds the 28% figure. If it does, you probably will want to select a slightly less expensive home. If you are under that figure, your next step will be to obtain pre-approval from a lending institution such as a bank. Gather all of your financial records such as Income tax returns, latest pay stubs, bank statements and any other financial documentation you think will be pertinent. Schedule an appointment with the lender. You might want to write down any questions beforehand so you don’t forget to ask them during the interview. Some banks offer either a pre-qualification or a pre-approval process. The pre-qualification is relatively quick and simple and usually results in an estimate of your monthly payment, whereas a pre-approval is a more comprehensive loan application procedure which will normally result in an actual rate being established. Although the second procedure is more intensive, it is generally the preferable way to go. Occasionally the lending institution will ask for further documentation regarding income, credit history, liens, or other salient questions. Respond immediately and completely to their concerns. Otherwise, you might wind up with a denial of your application. Once the bank approves you pre-approval application, you will have completed the first major step in buying your first home.Call Now for More Information: (248) 569-1486

Are home loans available to cover repair costs?

Kay Francis Woods — Fri, 08 Nov 2013 20:29:29 -0800

Do you have more repair skills than cash? If you would like to purchase a home and get a great value, you might be able to get a loan for the home of your dreams with the help of 203(k) rehab loan insurance. ) As long as the After Repair Value (ARV) of the home is MORE than the amount you need to borrow, getting a loan with the help of 203(k) loan insurance might be the way for you to go. Example: $25,000 - Home Purchase Cost $35,000 - Home Rehab Cost $60,000 TOTAL COST $125,000 - Home Value AFTER Repairs Ordinarily, a lender will be concerned about making a loan on a property for more than they can resell the property immediately on today's market, because if the borrower defaults on the loan, the lender has no way of recouping the costs. However, with the help of 203(k) rehab insurance, the lender is covered for both the initial home purchase price AND the rehab costs, even if the borrower defaults on making payments on the loan. This is really good for the buyer, also, because it is possible to get more house for the money since many people do not want to buy a home, only to make repairs after moving into it. This is also good for the neighborhood, also, because it encourages people to buy and fix properties, removing eye sores from the neighborhood. Of course, there are restrictions, but many people do not realize they can do this, and they can get a lot more home for the money through this (loan insurance) program. The total loan amount cannot exceed the After Repair Value of the house (the value once repairs are done). The cost of the rehab must be, at least, $5,000, or it can be as extensive of an entire reconstruction, as long as the existing foundation of the home remains. For more details, you can visit the US Housing and Urban Development site: http://portal.hud.gov/hudportal/HUD?src=/program_offices/housing/sfh/203k/203k--df If you are a true handyman, this might be a great opportunity for you. Call for More Info: (248) 569-1486

Why buy a home in Detroit right now?

Kay Francis Woods — Fri, 08 Nov 2013 20:31:51 -0800

If you are renting your home in Detroit, there is a very good chance that you are wasting money. Ordinarily, paying rent instead of a house payment to build toward an asset is a bad idea, anyway. However, with today's house prices in Detroit, you are probably PAYING MORE EACH MONTH. That's right! Right now, in many places within the City of Detroit, the amount you have to pay for RENT each month EXCEEDS the TOTAL MONTHLY COST TO OWN, even if you are borrowing the money. Currently (at the time of this blog post), you can buy a home similar to this (below) for about $50,000, give or take. Let's compare the approximate major monthly costs:RENT: $800 - $950/MonthHOME OWNERSHIP (borrowing $50,000 at 6% for 30 years) Mortgage Payment: $300/Month Property Taxes: $200/Month Home Insurance: $125/Month Total Cost: $625/Month (vs. $800-$950/Month to Rent) This is making no mention of any of the other tax benefits you get from owning your own home in Detroit rather than renting. It also does not take into account that you can build equity in your own property. It also does not consider any help you might receive from a down payment assistance program that could be available for you. If you're renting in Detroit, what is your REAL excuse for not owning your own home in Detroit? Call Now for More Information: (248) 569-1486

Why buy a home now?

Kay Francis Woods — Fri, 08 Nov 2013 02:59:05 -0800

Why buy a home? What makes it so much better than renting a place to live? Of course, as a real estate company, we make money when people buy or sell homes using our service, but it actually makes sense for YOU...for many reasons...but it's especially true for Detroit houses. You really should buy now, because it makes sense. Okay, how does it makes sense FOR YOU? Reasons to Buy vs. Own a Home However, there are very good reasons to buy a home vs. renting in general.Reason #1: Building Your Own Asset--Building Equity Essentially, you can work toward entirely owning a home. When you first buy a home, unless you pay for the entire cost in cash, you will take out a loan to be able to afford to purchase your home, and your home will be mortgaged to the lender until you repay the entire loan. That means you will need to make a mortgage payment. Yes, a lot of this mortgage payment goes toward paying the interest on the loan, especially during the first 10 years of repaying that loan (assuming the buyer takes out a very common 30-year mortgage). However, even in THESE situations, you will begin to own your home...which will become an asset. Once you owe less on your home than the current market is willing to pay for your home, you can sell it and get cash...or use it toward a down payment toward your next (possibly larger?) home. That positive difference between what you owe versus the amount you can sell your property is called equity. You cannot sell a place you are renting; so you can never get equity. When you own your home, you can. It is also a sort of forced savings program. Even if the market price of your home drops, once you've paid off your mortgage, you have an asset to sell...which allows you to collect money from selling it. Again, you cannot do this with a place you rent, because the place is not yours to sell. Buying a home gives you an asset that you can sell. Renting does not. This is a beginning step toward building your personal wealth. There are not very many wealthy "renters."In other words, when you rent, you are making your landlord wealthy. When you buy, you are making yourself wealthy.Reason #2: You don't need permission to make changes to your home. Do you absolutely HATE that wall in the middle of the place where you're living? Do you really like that carpet in that front room, or would you like to upgrade the hardwood floor? Perhaps, your landlord will allow you to make these changes, but at the very least, you need your landlord's permission to make any changes, and THAT is the best case scenario. Most landlords do NOT want you making any changes to his (or her) property. There is not anything you can do, because it is your landlord's property--not your property. So you can't make the changes to the way you live...unless you OWN your own home.Reason #3: You get tax advantages. Most people who rent, simply take what is called a Standard Deduction. They do not get to itemize their taxes, because they do not have enough deductions to exceed that government-selected basic (standard) deduction level. However, when you own your own home, (at least at the time this post is being written) here are some deductions you will be able to take: Property Taxes: Yes, those property taxes you need to pay to your city can be (and should be) deducted from your income taxes. That means that there will be less taxable money for the IRS to take from your income. Mortgage Interest: There are restrictions, but home owners that borrow to finance the cost of their home usually have to pay mortgage interest on top of repaying the actual loan amount. That portion of your mortgage payment that goes toward paying interest--not the loan base--can be deducted from your income taxes. (This deduction might apply toward a second mortgage or even a couple of other different types of money that you might borrow.) PMI Premium: Private Mortgage Insurance (PMI) is the insurance you purchase (and pay each month) to cover the lender (in part) if the person borrowing the money fails to repay the loan. This applies to people who cannot make, at least, a down payment of 20% of the entire sale price of the home's purchase price. Depending upon certain criteria, you might be able to deduct some of this "additional monthly cost" on your income taxes. Property Improvements: No, you cannot deduct the cost of improving your home on your annual income taxes, but you can deduct them...eventually. When? Improvement costs are considered to be your "Cost Basis" when you sell your home. Once you sell your home, in most cases you will be responsible to pay tax on the profit you made between your final sale price vs. your purchase price. Actually, you get to add several home improvement costs to the purchase price to make a higher "cost basis," which will help lower your tax bill. House Depreciation: The physical structure of your home will be "less new" over time. IRS Tax Code allows home owners to deduct depreciation of the building on your property (not the land). This is another opportunity for home owners to build a bigger income tax return (that you do not get as a renter).Reason #4: Creditors Give Lower Rates to Home Owners Check your auto insurance rates? Compare the cost of your auto insurance when you are renting a home versus buying a similar home in the same neighborhood. It's cheaper! In general, many creditors consider home owners to be more stable--less of a credit risk--than renters. Therefore, as a home owner, you will be more likely to be granted credit, and you are likely to pay less for that credit than you would as a renter.Reason #5: Price Appreciation: Home prices are really low now While house prices are not quite as low as they were in 2008 or 2009, in many neighborhoods they still are at levels similar to the 1990s...in some areas even as low as they were in the 1970s. It's no secret that they were too high in the mid-2000s, but home prices will eventually return to those levels in most areas. There are some areas that are decayed enough that the home price is not likely to rebound soon. However, even in those cases, often these neighborhoods are targets for revitalization. Because land prices in those areas tend to be cheap for wealthy investors, they become attractive investment opportunities. Detroit's Midtown neighborhood has seen a recent resurgence. There is even a Whole Foods grocery store there now. It's possible that the often-maligned Brightmoor neighborhood will be one of the next Detroit neighborhood revitalization targets. Regardless of where you live, most likely, house prices are at the lowest level you will see in your lifetimes. (Hopefully, we will avoid the same habits that led us to this most recent housing bubble...at least within OUR lifetimes.) Honestly, there are probably other reasons, but you probably have read more than enough about reasons to buy a home at this point. Visit Conquest Real Estate Group's Website