Category: Mortgage Tips

Why Conventional Loans are Better than FHA Loans

Posted on March 20, 2019 by Anthony Bird - Buying a Home, FHA Mortgage, First Time Home Buyer, Local Michigan, Mortgage Tips

Conventional Loans are home loans that conform to the underwriting guidelines set by the Government Sponsored Entities, Fannie Mae and Freddie Mac. In the past, conventional loans were only for elite borrowers that had 20% or more for their down payment. Times have since changed opening up great new programs for low to middle income earners and first time homebuyers.

Why are Conventional Loans Better than FHA Loans

Conventional Loans are now an affordable option for those without the highest credit scores. Mortgage Interest Rates are currently in a tighter spread. By this I mean that the best creditor borrowers and the lower score borrowers will have an interest within 1% to 1.5% of each other.

This is helped by programs like Fannie Mae’s HomeReady Loan and Freddie Mac’s HomePossible Loan. These programs limit the loan level price adjustments (LLPAs) which increases the par offering rate. These programs also allow first time homebuyers to buy a home with only 3% down while FHA requires a minimum down payment of 3.5%.

In the past, Private Mortgage Insurance (PMI) rates would also be absurdly high for lower score borrowers seeking Conventional mortgages. With the competition between PMI companies, mortgage insurance rates have dropped significantly in the past few years. This allows Conventional loans to be very competitive with Government Insurance Loans like FHA mortgages.

FHA Mortgage Insurance Cost May Cost More than Conventional Loans

Conventional loans may be a better option for homebuyers than FHA Mortgages because of the mortgage insurance savings. On Conventional loans, there is typically a monthly PMI fee if a borrower does not put a 20% down payment towards their purchase. FHA has a similar fee plus an up front charge.

FHA Mortgage insurance VS Private Mortgages Insurance

FHA Mortgage Insurance	Private Mortgage Insurance
Required on all Loans	Required on conventional mortgages with less than 20% down
Two Types of mortgage insurance	May be dropped once loan to value is under 78%
Cannot be removed if down payment is less than 10%	What is an FHA Up Front Mortgage Insurance Premium?
May be more expensive	Many options for PMI payments
	Offers Reduce Premiums for First Time Homebuyer Programs

FHA Loans charge two types of Mortgage Insurance Premiums (MIP). There is Upfront Mortgage Insurance Premiums (UFMIP) which are payable to HUD at close. The UFMIP is calculated as a percentage of the original loan amount. This fee is currently set at 1.75% of the base loan amount. For example, If you borrower $200,000, the FHA UFMIP added to your loan amount is $3,500. This is an extra expense not found on Conventional Loans.

What is an FHA Annual Mortgage Insurance Premium?

The Second type of Mortgage Insurance on FHA Loans is Annual Mortgage Insurance Premiums (MIP). This calculation varies based on loan-to-value and loan term but is as high s .85% of the original loan amount. For example, if you borrowed $200,000 the annual MIP would be $200,000 * .0085 = $1,700 which is split up over 12 months and added to your monthly mortgage payment. In this example, your payment would increase by $141.67 for MIP.

April 2013, FHA made a major change which started the shift away from this loan type. They changed the way annual FHA mortgage insurance fees were charged by making FHA Mortgage Insurance Premiums payable for the life of the loan. In past years, it would drop off under certain circumstances similar to Conventional Loans when your loan was paid under 78% of the home’s value.

Conventional Loans are more Attractive to a Seller than FHA Financing

In many areas of the country, there is a shortage of homes for sale which creates a sellers market. This means that sellers can be more picky when accepting offers from buyers on their homes.

When a buyer is making an offer with FHA financing, a seller may be reluctant to accept due to additional requirements for the home’s conditions compared to Conventional Financing. Having a Conventional Loan Pre-Approval may make the difference from getting your offer accepted or getting rejected by a seller.

Why Would Anyone Still Do FHA Loans over Conventional Loans?

There are certain circumstances where FHA finance may be a better option than a Conventional Loan.

FHA Loans with Down Payment Assistance

Many Mortgage Down Payment Assistance Programs (DPA) work only in conjunction with FHA financing. If a borrower does not significant funds available or down payment, DPA programs may help the buy a home.

FHA Loans Allow for Lower Credit Scores

Conventional Loans have minimum credit score requirement of 620. If a borrower has a credit score lower than this, FHA financing may be the only option. Currently FHA allows for credit as low as a 530 with a 10% down payment or as low as 580 with only a 3.5% down payment. Many borrowers with a credit score lower credit scores may have no problems qualifying for FHA financing when Conventional loans are not an option.

FHA Loans Have Shorter Wait Periods Than Conventional Loans

FHA loans have shorter wait periods for major life events such as bankruptcy or foreclosure. FHA loans only require a 2 year wait period from Chapter 7 Bankruptcy while Conventional requires 4 years. FHA requires a 3 year wait period for foreclosures while Conventional Loans require 7 Years. These wait periods may allow a borrower to buy a home with FHA financing while conventional is not an option.

FHA Loans allow for Higher Debt To Income Ratios than Conventional Loans

A borrower may be better off with an FHA loan over conventional financing if they have a high Debt To Income Ratio. Conventional Loans typically require a borrower to have a Debt-to-Income (DTI) of 45% or less to qualify with a maximum DTI of 50%. FHA is more flexible with higher debts allowing a maximum of 56.9%. Borrowers with higher debts may only qualify for FHA Loans.

FHA Streamline Refinance

If a borrower already has an FHA Loan but does not have a significant amount of equity in their home, they may qualify for a rate reduction through an FHA Streamline Refinance. This loan type may allow them to drop their rate and payments without an appraisal or documenting income and with little to no costs. This is a program unique to FHA financing and can help a borrower that purchased their home when their credit scores were lower but have since improved.

Summary of Why Conventional Loans are Better Than FHA Loans

With the current guidelines set by FHA, Fannie Mae and Freddie Mac, Conventional Loans may be a better fit for buyers than FHA loans. Conventional loans offer lower down payments of only 3% for first time homebuyers while FHA loans require 3.5% down. Mortgage insurance may be significantly cheaper on Conventional loans versus FHA loans. Lastly, submitting an offer with Conventional Financing may be more attractive to sellers over an FHA Pre-Approval.

To get more information on what loan type maybe the best fit for your situation, call a licensed loan officer today at 800-555-2098 or request information below.

Top 3 Myths About Using a Mortgage Broker

Posted on February 23, 2019 by Anthony Bird - First Time Home Buyer, Local Michigan, Mortgage Tips

Mortgage Broker Myth #1

One of the biggest myths of using a Mortgage Broker is that they do not have control of the underwriting process. Many retail lenders and banks claim this because they have employees that underwrite the file whereas a mortgage broker works directly with the end investor to underwrite the file.

Retailers claim they can go directly to the underwriter and have them clear any unusual conditions however the retail underwriters are typically more cautious because they have to underwrite to the end investor’s standards and sell the mortgage to them after closing. If they make a mistake, the end investor may refuse to purchase the loan.

Local Mortgage Brokers have a choice on which bank or end investor they want to send their loans. If one does a poor job by not clearing the loan quickly, the mortgage broker may choose to no longer do business with them. This forces underwriters to remain accountable and nimble on clearing conditions.

If a retail loan officer at a bank or direct lender is having difficulties clearing the conditions on their loan, they have no other options because they are held captive to their once underwriter which is the only option they have.

Mortgage Broker Myth #2

The second myth about using a mortgage broker is that they take longer than a retail lender or a bank. According to the January 2019 Ellie Mae Mortgage Origination Survey of many major banks and lenders, the average time to close a mortgage is 45 days!

Using a mortgage broker, the average closing time is 21 days which is less than half of the retails and bank lenders. Taking over 30 days to close a loan with a mortgage broker would be uncommon or the result of 3rd party issue.

Mortgage brokers operate more quickly because all they do is mortgage loans. While banks may have other services such as auto loans, credit cards and checking accounts, these are distractions from closing mortgages quickly!

Mortgage Broker Myth #3

The third mortgage broker myth is that mortgage brokers cost more than banks and retail lenders. This could not be further from the truth!

For nearly all loans that mortgage brokers close, there are zero origination fees. This means no underwriting fee, no origination fee and no processing fees. For many banks and lenders these fees could be thousands of dollars that are charged to the clients and add to the cost of buying a home.

Mortgage brokers have access to the lowest rates in the mortgage industry. As a mortgage broker, they receive wholesale rates from the end investors. Generally speaking, mortgage brokers have low overhead and thinner margins which allows them to pass huge savings on to their clients. Lower costs and overhead result in lower than average rates.

Why to Use a Mortgage Broker

With mortgage rates on the rise, consumers are becoming more aware of high rates and fees that are charged by large retail lenders and banks. By simply getting a 2nd quote from a local mortgage broker, a client could save thousands of dollars on the up front costs of their mortgage and tens of thousands of dollars over the life of their loan by getting a lower interest rate.

Mortgage Brokers: Low Rates, No Fees, Quick Closings.

Mortgage brokers are mortgage experts that specialize only in home loans. They work directly with the end investors to close loans quickly and efficiently and pass on low rates and, for most loans, zero lender fees!

To speak with a mortgage broker, give us a call today at 800-555-2098 or request information below!

How to get the Best Mortgage Loan

Posted on October 5, 2018 by Anthony Bird - Buying a Home, First Time Home Buyer, Local Michigan, Mortgage Tips

When it comes to home loans, there are hundreds of loan programs and options that you may want to consider. Many first time home buyers do not know where to start when they want to buy a home. It is overwhelming to most people who do not have experience buying a home or getting a mortgage. The good news is, a loan officer can be your tour guide to help you get the best mortgage loan.

A loan officer’s job is to review your financial situation and provide home loan options. They will help to narrow down mortgage programs that do not fit your goals and also ones that you may not be eligible for. Here are the basic categories that you should review with your loan officer to get the best mortgage for your situation.

What Mortgage Program is the Best?

There are several loan programs that you can apply for including Conventional Loans, FHA Loans, VA Loans, USDA Rural Development Loans, Jumbo loans, and Portfolio Loans. Each loan program has its pros and cons.

You may not be eligible for some programs. VA Loans, for example, require that you have served in the military. If you haven’t served, then this would not be a loan option for you. Conventional loans typically require higher credit scores and are more rate sensitive to lower credit scores. USDA RD Loans, have income limits and restricted areas where you can purchase.

As you can see it is nearly impossible to quickly learn all the ins and outs of each program when you are buying a home. A loan officer can help offer options on what loan program may be the best fit for your situation.

What Mortgage Term is the Best?

Once you decide on what mortgage program will be the best fit for your situation, you will need to decide on a mortgage term. Loan terms range anywhere from 10 years to 40 years for some programs. For most loan programs we could even offer a 17 year loan or a 27 year mortgage based on your goals. The most popular mortgage option is a 30 year mortgage.

Many financial advisers recommend a 15 year fixed rate mortgage. This allows you to get a great rate and pay off your mortgage quickly. Typically loan rates are lower for shorter term loans. The downside is that the monthly payment will be higher the shorter your loan term is.

A traditional 30 year mortgage term has low payments but most of the payment goes directly to interest for the first several years. Many people are shocked at how little their loan balance goes down after a year or two of mortgage payments.

Be sure to ask your loan officer what mortgage term is best for your goals.

Include Escrows or Waive Escrows?

When you get a mortgage you may have the option to include escrows into your mortgage payment. An escrow account is a savings account held for you by your mortgage servicer that is specifically for paying the property taxes and home owners insurance on your home.

Typically, government insured mortgages including FHA, VA and USDA require you to have an escrow account included with your mortgage.

Conventional loans may allow you to waive escrows. This means that you would be responsible to pay your own taxes and home owners insurance bills when they become due.

Many people like escrow accounts for the ease of payment. It is one less thing homeowners need to worry about when buying a home. On the other hand, some people would rather waive escrows and keep their own savings where they can earn interest and be more in control of their funds.

Fixed Rate or Adjustable Rate?

A major choice to consider when getting a mortgage is if you would rather have a fixed rate or an adjustable rate. Most homeowners choose to have a fixed rate that does not change for the life of your loan. This gives predictable payments and certainty that your payment will not adjust.

Other homeowners wish to choose an adjustable rate mortgage, commonly refereed to as an ARM Loan. Typically ARMs start off with a lower rate which is locked for a set number of years (3, 5, 7, or 10 years). Once the initial fixed period is up, the rates are subject to adjustments to the LIBOR or other indexes. If the rates go up, your mortgage payment goes up. If the rates go down, your mortgage payment goes down.

Choosing a fixed rate is thought to be a more safe and secure loan option. ARMs should be carefully considered for financially savvy homeowners. Be sure to ask your loan officer about ARM Loans if you are interested otherwise a fixed rate mortgage is most likely the best choice.

What Interest Rate Should I Pick?

Lastly, when getting a mortgage, you have to pick a mortgage rate. Many people do not realized that they have options for different mortgage rates. Once you select all of your other mortgage details, your loan officer will present your mortgage rate options.

When it comes to mortgage rates, you also need to consider the fees associated with getting the loan. Typically, the lower the rate, the higher the fee. Conversely, the higher the rate, the lower the fees.

Should I Pay Discount Points?

If you want the lowest rate possible, you can certainly request a rock bottom interest rate but be prepared to pay discount points for a rate lower than the market rates.

If you want to make sure you are having the lowest costs to get a mortgage, then you may want to consider a slightly higher interest rate. Picking a higher rate may allow you to have no lender fee or even receive a lender credit that will apply towards other closing costs and pre-paid items like taxes and insurances.

Deciding what rate and fee combination can seem difficult, but your loan officer can help you do a break even analysis to compare the time to break even on your investment of paying points for lower rates.

Lets look at an example: If you were to pay 2 points on a $100,000 loan for a lower rate, this would cost you $2,000 in extra closing costs. By getting the lower rate, lets say you save $50 per month.

To find your break even point, you will divide your extra costs of $2,000 by your savings of $50 which would give you 40 months, or 3.33 years to break even on your up front investment.

If you plan on staying in the house for 5 years, then you will save more than your costs therefore paying points may make sense. If you plan on selling your home in 2 years, then you would not benefit from the up front investment and you would be better off taking the higher rate with lower fees.

There are many factors to consider to get the best mortgage for your situation. It is not as easy as simply picking the lowest rate. Be sure to work with a trusted loan officer that can help review all the mortgage programs to get you the best mortgage for your situation.

For more information on home loan programs or to review the best loan for you, request information below or call a loan officer at 800-555-2098.

Doctor Home Loans In Michigan

Posted on October 2, 2018 by Anthony Bird - Buying a Home, Mortgage Tips

Are you currently in, or recently completed a medical residency or fellowship? Our Doctors’ Loans exclude student loans from your debt-to-income ratio! Call us today at 800-555-2098 and let us discuss your options!

Benefits of Doctors Loans in Michigan

Doctors can now easily qualify for a mortgage without including student loans in the debt to income ratios. Let’s face it, becoming a doctor costs a lot of money. Most doctoral graduates have hundreds of thousands in student loans which may prevent them from becoming home buyers. With our Michigan Doctor Loan Program, recent graduates can stop renting and buy a home.

Up to 97% Financing
No Monthly PMI
Free Appraisals for all loans that close by December 31st, 2018 (credit given up to $525)
Student Loan Deferment up continue at lease 12+ months from closing date

For more information on our Physician’s Mortgage Loan, call us at 800-555-2098 or request information below:

8 Tips for Moving with Pets

Posted on September 13, 2018 by Anthony Bird - Buying a Home, Local Michigan, Mortgage Tips

Free Conventional Appraisals

Posted on August 31, 2018 by Anthony Bird - Buying a Home, Mortgage Tips, Refinance

We have some exciting news! Conventional Appraisals are now FREE for new loans submitted to us from 08/26/2018 that close by 12/31/2018!

Free Conventional Purchase Loan Appraisals

If you are buying a home, then take advantage of the our Free Appraisal program to keep up to an extra $525 in your pocket when we take care of the appraisal expense. Saving money for your down payment and closing costs can be a hurdle for some home buyers. This is just another way that Riverbank helps to make buying a home affordable for all.

Free Conventional Refinance Loan Appraisals

Many of our clients are finding now as the perfect time to refinance their mortgage. Refinancing with a conventional loan, you will be able to take advantage of our Free conventional appraisal program. Refinance benefits include:

Drop PMI
Lower your Interest Rate
Refinance to a 15 Year Mortgage
Consolidate High Interest Debt

To get started with a refinance mortgage with a free appraisal call us at 800-555-2098

Free Appraisal Eligibility & Requirements

Conventional Loans Only
Eligible for New Applications Submitted on or after 08/28/2018.
Loan Must Close on or before December 31st, 2018.
Eligible Property Types: Single Family Residences, 2 Units, 3-4 Units, Site Condos, Condos, PUDs (Manufactured Homes Not Eligible)
640+ Credit Scores
Appraisal Transfers Not Eligible
Program Not Available on Portfolio Loan Products

Not all will qualify. For more information, simply complete the form below or call a loan officer at 800-555-2098.

GENERAL DISCLAIMER: Program may not be available for all clients applying for conventional financing. Free Appraisal Promotion will be applied as a credit to the borrower’s closing costs on the final closing disclosure as a reimbursement of the appraisal fee limited to a maximum of $525. Appraisal rush fees will not be reimbursed. Loans that do not meet the requirements for this promotional program listed above will not be given this credit and must pay the cost of their own appraisal expenses as required by standard lender requirements. Loans that do not close, for any reason, including withdrawal or denial, will not be given the appraisal credit advertised. All loans must close by the December 31st, 2018 deadline to take advantage of this promotion. Loans that do not close by this date will not be given the promotional credit.

Breakdown Your Credit Score

Posted on August 14, 2018 by Anthony Bird - Buying a Home, First Time Home Buyer, Mortgage Tips

When buying a home, your credit score is an important factor in your home loan approval. It is important to know what is on your credit and what credit score you have when applying for a mortgage.

While, the exact scoring models are proprietary and not released by the credit bureaus to the public, credit experts have determined the weight of each factor that determines your credit score.

Related: Buying a home with Bad Credit may be possible with FHA Home Loans. We accept applications down to a 580 credit score!

What Makes up your Credit Score

Payment History

Paying your bills on time is the most important factor for your credit score. Weighted at 35% of the total score, paying bills late can devastate your credit rating.

Amounts Owed

Credit to Debt ratios are the second most important factor which is weighted at 30% of the overall score. The good news about this is that it is a quick and easy fix to improve your credit scores. For example, if you have a credit card with a $500.00 limit and you owe $490.00, it is essentially “Maxed Out” which reflects poorly on your credit rating. Paying down this debt to under 30% of the limit ( $150 or less in this example) would boost your scores quickly!

Length of Credit History

The length of time you have had accounts open is the next rating factor. At 15% of the credit rating, the credit bureaus know that maintaining long credit relationship with banks and lenders proves that you are a good credit risk and positively affects your score. For this reason, it is important to keep old credit lines open even if you are not utilizing them.

New Credit Inquiries

Having your credit pulled is an necessary evil when applying for a mortgage. What is not necessary is having it pulled by 10 different institutions for different credit types. If you apply for credit cards, auto loans, and mortgages over a short period of time, your credit rating may drop.

Types of Credit

The final major category that determines your credit score is the types of credit that you hold. Long term investments such as a mortgage can positively impact your credit. If you only have revolving credit such as credit cards, your credit depth is shallow and may not give you the highest credit scores possible.

Click here to Download Our Credit Tip Flyer!

How to Improve your Credit Score

There are simple techniques to improving your credit scores. It is important to monitor your credit from time to time and make sure all of the information is accurate. If there are errors, you can dispute the information directly with the bureaus to have it corrected. It is not suggested that you do this before or during the mortgage process as it may cause delays.

Additionally, paying down revolving account balances can quickly boost your credit scores. While there are no magical fixes to your credit, there are several best practices that you should do to increase your credit score.

Tips to Improve your Credit Rating

Correct inaccuracies on your credit
Pay all your bills on time.
Do not apply for too many lines of credit.
Do not max out credit cards.
Keep older credit lines open.

Contact a mortgage expert today by calling us at 1-800-555-2098 or simply apply online below. We are happy to help!

Hundreds of Mortgage Options

Posted on June 18, 2018 by Anthony Bird - Buying a Home, Mortgage Tips

As local mortgage experts, we are here to help all types of families. We do mortgages. Only mortgages. We do not offer auto financing or credit cards. This allows us to be experts at what we do and have many types of mortgage options for all financial situations.

If you have a unique financial situation, there is no better spot to get a loan than a local mortgage broker. We can shop rates and mortgage programs at multiple banks and underwriting companies at once. This insures that you will receive the best mortgage package available for your situation.

Low Rates. Low Costs. Expert Advice

To get expert advice, call us at 1-800-555-2098 or simply apply online below. We are happy to help!

How to Get Your Offer Accepted

Posted on May 3, 2018 by Anthony Bird - Buying a Home, First Time Home Buyer, Low Down Payment Loans, Mortgage Tips

If you have been searching for a house in the last couple of years, you will be familiar with what the real estate industry calls a “lack of inventory”. This means that there are more people looking to buy houses than there are people interested in selling homes and there is more competition on each home. This imbalance causes a housing shortage which can be a frustrating situation for families looking to buy a home and makes getting your offer accepted a tough task.

The housing shortage has created a spike in home prices. According to the National Association of Realtors, “The median existing-home price for all housing types in March was $250,400, up 5.8 percent from March 2017 ($236,600).” This increase in prices has been affecting home affordability nationwide.

Infographic from http://www.simplifyingthemarket.com/en/2018/04/27/existing-home-sales-grow-despite-low-inventory-infographic/

Locally in West Michigan, it is very difficult to find affordable homes under the $200,000 range. For first time homebuyers and those looking to downsize they are seeing multiple offer situations and bids far over the home’s listing price. Some desperate buyers are going as far as to waive their right to inspections and guaranteeing to pay above appraisal amounts. For those that do not have access to large amounts of cash, they may have a hard time competing with their bids.

How to Get your Offer Accepted to Buy a Home in a Sellers Market in Michigan

Getting your offer noticed in a stack of multiple offers is not an easy feat. Many sellers are reviewing several offers for their home and simply disregarding lower priced offers and also offers with contingencies and what they consider riskier financing. Here are 8 tips on how to make your offer stand out and get your offer accepted to buy a home in Michigan.

1) Get a Strong Pre-Approval to Strengthen your Offer

To get your offer accepted there are several things a buyer can do. First of all you should speak with a local, knowledgeable, licensed loan officer that can Pre-Approval you for the strongest type of mortgage that you can qualify for. Typically sellers see conventional as the best type of financing because it has less requirements for the home’s condition than other loan types and can close quickly. Receiving a strong pre-approval from a local lender will put you a leg up on the competition with generic automated letters from the big national companies.

2) Consider Alternatives to Seller Paid Closing Costs

If a buyer does not have enough funds to cover their own closing costs then it is a common practice to ask the sellers to pay their closing costs as part of their offer. The sellers will view this as additional costs and reduce their proceeds from the sale. Alternatives to Seller Paid closing costs should be considered including:

Pay your own closing costs
Ask about low down payment or zero down loans
Get a gift from a family member for your costs
Ask the lender for lender credit option to reduce your costs
Look for ways to reduce your closing cost by shopping insurance and title company fees

3) Give the Sellers Occupancy After the Closing

Many sellers are hesitant to sell because they are fearful that they will not be able to find a new home in time to transition their belongings to a new house. It may help to calm their fears by giving them extra time to move after you close on the purchase of their house. It is common these day to offer 30 days after close for the seller to vacate the property. This may be an important reason why they choose your offer over others.

4) Personalize your Offer By Writing a Letter

As cheesy as it sounds to write a heart felt letter, my experience shows that it works! Many times there are a lot of emotions and memories that come with a house. It may be the place where they raised their children.

They may have put sweat and tears into building the house. It might have been a house that was in the family for generations. All these factors compel the sellers to want to make sure it goes to a deserving family that will appreciate it as much as they do. Simply tell them why your happy little family would be deserving and that you will take great care of the place.

5) Offer to Pay Seller’s Closing Costs

If you have access to cash and feel strongly about getting your offer accepted, you could offer to pay for the sellers closing costs. In Michigan, Property Transfer Tax and Owner Title Insurance are typically paid by the seller unless otherwise agreed to by the buyer. If a buyer agrees to pay the sellers closing fees, the sellers would net more from the sale and walk away with more money.

6) Remove Contingencies from your Offer

Many times families will have contingencies before they can buy. For example, if you plan on selling your home before buying your next home, then you may write your offer contingent upon the sale of your home. This is a risky unknown for sellers. Your house may take a long time to sell which would not work with the seller’s timeline.

If you are able to qualify for a new home while still owning your other home, then it may be advantageous to submit your offer without a contingency for the sale of your home. Other contingencies you could remove would include appraising at sales price, or even waiving property inspections. These should be carefully considered as a last resort to get your offer accepted.

7) Adding an Escalation Clause as Part of your Offer

Speak with your real estate agent about how an escalation clause may work for your situation. In general, a clause would be added stating that if someone else offers higher than your offer, you will automatically increase your bid higher than theirs. You would want to make sure you set a cap on the maximum amount you are willing to offer.

8) Ask your Loan Officer to Call the Listing Agent to Confirm your Pre-Approval

Having a loan officer that will go above and beyond to fight for you is an important part of buying a home. Studies show that having a local loan officer versus a big bank or online lender increases the strength of your pre-approval. Part of a seller’s concern when reviewing offers on their home is that the buyer’s financing may fall through. If your loan officer has already received your documentation and confirmed that you are a well qualified buyer, then ask them to call the listing agent to confirm the details and give the sellers confidence in accepting your offer!

To review home loan options with a Licensed Loan officer simply complete the form below to request a free consultation or call us now at 1-800-555-2098.

Conventional Loan vs FHA Loan vs VA Loan vs USDA Home Loans

Posted on April 14, 2018 by Anthony Bird - First Time Home Buyer, Local Michigan, Mortgage Tips

When shopping for a mortgage it is a good idea to compare loan options. Many lenders offer a variety of home loans that might fit your needs. Each mortgage options has it benefits and weaknesses that should be considered for your individual loan needs.

Lending guidelines are not the same for all mortgage lenders. All banks and mortgage companies operate off the same set of guidelines for the specific mortgage programs however each may have its own overlays. Lending overlays are additional conditions or interpretations of the set guidelines. For example, FHA loans with a 3.5% down payment allows as low as a 580 credit score but most banks and lenders add an overlay that requires a 640+ credit score.

The best way to review mortgage options is to speak with a licensed loan officer that will be an expert on the loan options. They will help to review the pros and cons and assist with comparing home loans that may be the best for you.

The chart below compares Conventional Loans vs FHA loans vs VA loans vs USDA Rural Development Loans. These are the most popular loan options that most borrowers will review. As you can see below, if you have had a recent bankruptcy or foreclosure then Conventional would not be an option.

If none of these options seem to fit your life situation then a portfolio loan may be your last resort. Portfolio mortgages are home loans that do not fit the agency guidelines. They take a more common sense approach and make exceptions on loan requirements if the borrower is has financial strength in other areas. The trade off is that they typically require larger down payments and have higher rates than other loan programs.

Home Loan Comparison Chart

April 11th, 2018:	Conventional Loans	FHA Loans	VA Loans	USDA Loans
Minimum Required Down Payment	3% of Purchase Price	3.50% of Purchase Price (Only 1.5% required for our FHA Down Payment Assistance Program)	Zero Down	Zero Down
Annual Mortgage Insurance Rates (Paid Monthly)	Private Mortgage Insurance (PMI) ranges from .10 to 1.5% of the loan amount annually based on Residency Status, Credit and Loan to Value.	Mortgage Insurance Premiums (MIP) ranges from .80% to .85 % for loan terms over 15 years and .45% to .95% for loan terms of 15 years or less.	NONE	.5% of loan amount
Additional Costs	Increase to rate or loan fees based on credit score	1.75% Upfront Mortgage Insurance Premium added to your loan balance or paid in full at closing.	0% fee if Disabled Veteran or surviving spouse 2.15% for First VA Loan Standard Military 2.40% for First VA Loan National Guard or Reserves 3.3% Subsequent Loans	2.00% Funding Fee added to your loan balance.
Minimum Credit Score	620+ credit score	530+ with 90% loan to value and 580+ for 96.5% loan to value	550+ credit score	580+ (Additional requirements including proof of Rental History under 620 score)
Maximum Loan Amount	$453,100 Loan Limit (Read More)	$294,515 Loan Limits for Single Family Homes $377,075 for Two Units $455,800 for Three Units $566,425 for Four Units	$453,100 Loan Limit	$453,100 Loan Limit
Allowable Seller Contributions	Principal Residence & Second Homes LTV Greater than 90% = 3% LTV 75.01-90% = 6% LTV 75% or less = 9% Investment Properties ALL LTV ratios = 2%	6% Seller Contributions payable towards Buyer Closing Costs and Pre-Paid items.	4% Seller Contributions payable towards Buyer Closing Costs and Pre-Paid items.	USDA sets no maximum however most lenders set 6% Seller Contributions payable towards Buyer Closing Costs and Pre-Paid items.
Required Waiting Period after Bankruptcy	Chapter 7 requires 4 Years from discharge date Chapter 13 requires 2 Years from discharge date	Chapter 7 requires 2 Years from discharge date Chapter 13 requires 1 Years from discharge date	Chapter 7 requires 2 Years from discharge date Chapter 13 requires 1 Years from discharge date	Chapter 7 requires 2 Years from discharge date Chapter 13 requires 1 Years from discharge date
Required Waiting Period after Foreclosure	7 Years from Completion	3 Years from Completion	2 Years from Completion	3 Years from Completion

To review home loan options with a Licensed Loan officer simply complete the form below to request a free consultation or call us now at 1-800-555-2098.