Waiting to Buy a Home in West Michigan?

5 reasons why not to wait to buy a home

5 Reasons Why You Shouldn’t Wait to Buy

Timing can mean the difference between getting a home at a good value or missing out completely. Right now, the West Michigan housing market is red hot. If you are thinking about buying a house in West Michigan, here are five reasons you shouldn’t wait much longer:

1) The growing economy.

Grand Rapids has entered a new life outside of its history as a rust-belt city. Currently it is listed at 31st in Forbes Best Places for Businesses and Careers. Unemployment is at 3% with jobs growing at a rate of 2%. That growth, in turn, means homes purchased in the region will increase their worth as investments.

2) Increased demand for homes.

In 2016, Grand Rapids ranked third for housing shortages, according to the National Association of Realtors. Forbes Magazine forecasts that 2017 will be similar to last year in terms of housing demand. Last year, homes averaged 52 days on the market. Experts believe the window of opportunity will be even shorter in 2017. Securing your mortgage is key, so you can get the home you want before it’s too late.

3) Interest-rate increases.

The Fed increased interest rates in March 2017 for only the third time since the 2008 financial crisis — and there’s no sign the rates will decrease again anytime soon. In fact, the rates may increase again before the year is over. Currently, the National Association of Realtors averages nationals rates at 3.39 percent for 15-year mortgages and 4.14 percent for 30-year mortgages. To see what kind of rate you could get for a mortgage, try our mortgage rate calculator.

4) Deregulation.

The Trump Administration has moved toward rolling back the Dodd-Frank Act, the Obama-era federal reform legislation that put the government in charge of regulating the financial industry. Trump’s financial deregulation may benefit mortgage seekers by loosening restrictions on lenders. Home buyers would be able to secure loans easier, but it would mean the pool of available home buyers would likely increase.

5) Options for imperfect credit.

If your credit is imperfect, options are available that could help you buy a house anyway. FHA loans require a 580 credit score with a 3.5% down payment. However, you can still get an FHA loan with a credit score between 500 and 579 with a 10% down payment. Another option is asking a friend or relative with a better credit history to co-sign on your loan. Just be careful about co-signing, because you could strain your relationship with the person if you run into any financial trouble. Other than FHA and co-signing, you can always pay down your debt, decreasing your debt-to-income ratio, or find a way to increase your housing-to-income ratio.

Given the rise of interest rates, a high demand for homes, and a potential ease in mortgage regulations, 2017 is shaping up to be another year when demand will outpace the available supply of homes. So, the longer you wait, the less likely you are to get the kind of home you want within your budget.

To start the process now, check out our pre-approval page or contact one of our mortgage loan officers for more information at 1-800-555-2098.

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Michigan Dower Rights Repealed

Michigan Dower Laws

Michigan’s Marital Signatory Requirements

Effective today April 6th, 2017, both spouses will no longer be required to sign documents (mortgage, rescission, Loan Estimate (LE), Closing Disclosure) unless required by Michigan’s Homestead Law. Prior to this law change, Michigan’s Laws required that female spouses sign mortgage documents to acknowledge liens place on real estate.

History of Dower Rights in Michigan

The Dower Rights in Michigan can be traced back to early 1797 ordinances. Nearly all other states have eliminated these archaic laws that are gender specific and only granted dower rights to married women without providing similar requirements for men. In modern times it creates more hassle than benefits for spouses. Even if a husband applied for a mortgage solely, the wife would still need to be placed on the mortgage and sign at the closing. The dower laws also required females to sign at the closing when their husbands sold real estate even if they were not joint owners.

Repeal of Michigan’s Dower Rights

On January 6, 2017 Governor Snyder signed Senate Bills 558 and 560 into law abolishing dower rights in the State of Michigan. These bills took effect on April 6, 2017. Moving forward married spouses will no longer be required to sign transfer and lien documents for real estate in which they do not hold title. The exception to this is the martial home which always requires joint authorization to refinance a mortgage on the real estate.

For more information visit: https://www.legislature.mi.gov/documents/2015-2016/billanalysis/senate/pdf/2015-SFA-0558-F.pdf

To apply for a Mortgage, call Riverbank Finance today at 1-800-555-2098.

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LEGAL DISCLAIMER: Riverbank Finance LLC and its officers are not licensed to practice law or provide legal advice. Interpretations and commentary are solely the opinion of the Author and should not be taken as legal advice. It is recommended that you seek legal counsel for advice on the law changes that may affect your individual situation.

Buying a Home with Student Loan Debt

Buying a Home with Student Loan Debt

In a few short months, thousands of college students across the country will walk across a stage, shake a hand, and graduate from a university with a degree and more than likely… a whole lot of debt. Student loans are often necessary to reach your educational goals, but will they affect your ability to qualify for other financing in the future? Here’s what you’ll need to know.

Qualifying for a Mortgage with Student Loan Debt

How your student loans will affect your ability to qualify for a mortgage depends on two things: the total amount you owe, and what type of home loan program you are applying for. There are many loan programs available today and they each treat student debt differently, by the way they calculate your monthly payment.

FHA & USDA Mortgages and Student Loan Debt

Effective last summer, the FHA and USDA began calculating monthly student loan payments at 1% of the total amount owed. Regardless of deferment or income-based repayment plans, 1% of the total must be used to calculate a borrower’s debt-to-income ratio (DTI).  If a borrower is on a standard repayment plan, and their monthly payment is greater than 1% of the total amount owed, the actual payment amount will be used.

For example, lets say John has $65,000 in total student loan debt, but he is in deferment for 6 months. His monthly payment will be calculated as $65,000 * 1% (.01) = $650 regardless of what he actually pays each month.  If, however, he is on a standard repayment schedule and his monthly payment is $780 per month, his payment must be qualified at $780.

VA Mortgages and Student Loan Debt

Last month, the Department of Veterans Affairs (VA) introduced a new policy regarding how student loan debt is calculated. Prior to this change, it was calculated the same way as FHA and USDA. Now, however, the payment is calculated based on 5% of the total student loan debt, divided by 12 months.

Lets get back to John. In this scenario, John’s payment will be calculated as $65,000 * 5% (.05) / 12 = $271. Under the VA mortgage program, John more easily qualifies, because his DTI is lower.

What if John’s student loans are in deferment? If his repayment is scheduled to begin within 12 months from the estimated closing date, 5% / 12 months calculation must be used. If not, however, the payment can be omitted altogether if written evidence can be provided as such.

Conventional Mortgages and Student Loan Debt

Under Fannie Mae Conventional guidelines, student loan payments are calculated under the same rules as FHA and USDA. Under Freddie Mac Conventional guidelines, however, an IBR payment can be used in place of the calculated amount.

Lets say John is on an income-based repayment structure and only pays $250 per month. John will simply need to provide a statement from his loan servicer showing the actual repayment terms.

Perhaps the best news yet is that our 1% Down Conventional program allows for an actual IBR payment to be used when qualifying a borrower. So, not only can John more easily qualify with a lower DTI, but he can put just 1% down on his home purchase!

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To apply for a Mortgage, call Riverbank Finance today at 1-800-555-2098.

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Mortgage Bankers vs. Mortgage Lenders vs. Mortgage Brokers

Bankers and Lenders and Brokers, Oh My!

Mortgage Bankers

When many prospective homebuyers think about getting pre-approved for a mortgage, they picture their local bank. They stop by the nearest branch, are greeted by a friendly teller, and ask to speak to a loan officer. There’s nothing inherently wrong with this concept, but it certainly isn’t the only way to obtain a mortgage.

Mortgage Lenders

Mortgage Lenders exist with the sole purpose of originating home mortgages. They do not have checking accounts or ATMs. Generally, they originate the mortgage, but once it closes and funds, they sell it to a mortgage servicer, and use the money to originate new mortgages. Mortgage lenders are also referred to as Direct Lenders or Retail Lenders.

Mortgage Brokers

Mortgage Brokers are basically a financial matchmaker, matching homebuyers to mortgage lenders. They develop relationships with multiple Wholesale Lenders to originate mortgages through the loan programs those lenders offer. Mortgage Brokers take a loan application, then send it to the lender who offers the best rate and terms for that borrower’s financial situation.

Which option is best for you?

Riverbank Finance is a Mortgage Broker, so I’m more than a little biased, but let me explain! Mortgage Brokers are a great option for most borrowers because we have access to more programs and encourage competition amongst our lenders—both of which drive pricing down. We also charge zero origination fees on the majority of our loan programs.

Working with a Mortgage Broker saves borrowers more than just money— it also saves hours of time! We shop our lenders’ rates and fees everyday, and know the program guidelines inside and out. Unlike banks and lenders, we do not add any additional overlays to our lenders program guidelines—their minimums are our minimums, allowing us to serve borrowers that others can’t.

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To apply for a Mortgage, call Riverbank Finance today at 1-800-555-2098.

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Michigan Jumbo Mortgage Limits

House with michigan jumbo loan financing.2018 Jumbo mortgage limits are based on guidelines set by Fannie Mae and Freddie Mac.  Most consider a Jumbo Loan anything over the conforming limit which is currently set at $453,100 however this may differ depending on the type of financing you are seeking. Referencing he Conforming loan limits for 2018 is the best resource to verify mortgage limits in your area.

Updated 1/29/2018: Charts Updated to show 2018 Loan Limits

For more information visit Jumbo loan mortgage.

The chart below, from Fannie Mae’s website, displays general mortgage limits in United States for mortgages closed in 2018.

UnitsContiguous States, District of Columbia, and Puerto RicoAlaska, Guam, Hawaii, and the U.S. Virgin Islands
GeneralHigh-Cost*GeneralHigh-Cost*
1$453,100$679,650$679,650$1,019,475
2$580,150$870,225$870,225$1,305,325
3$701,250$1,051,875$1,051,875$1,577,800
4$871,450$1,307,175$1,307,175$1,960,750

Michigan FHA Mortgage Limits

FHA mortgage limits: FHA County Mortgage Limits are determined by the county in which the property is located. For example, if you are financing a mortgage for a home in Grand Rapids, MI which falls in Kent County, FHA financing would limit your Loan amount to $294,515 or less for a single family home. Conventional mortgages would still permit you to mortgage up to the national mortgage limit previously mentioned.

It is important to know the jumbo mortgage limits for your area so you can avoid the high interest rates and fees generally associated with Jumbo loans.  Doing the proper research and working with the best lenders for your needs, can help save you thousands of dollars in both closing costs and mortgage interest.

Michigan VA Loan Limits

VA loan limits in Michigan following conforming loan limits which are currently set at $453,100 for a single family home. For a military veteran applying for a VA home loan the loan would also be limited based on the available VA entitlement remaining. Previous VA loans there were not paid in full may reduce the available VA entitlements that an individual is able to borrower. Fore more information on VA benefits in Michigan contact the Regional VA Loan Center below:

Cleveland
Department of Veterans Affairs
VA Regional Loan Center
1240 East Ninth Street
Cleveland, OH 44199
http://benefits.va.gov/cleveland/regional-loan-center.asp

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Buy a Home with No Closing Costs

Buy a Home with No Closing Costs

An alarming number of first time homebuyers are unaware that mortgages involve closing costs, and which often creates a financial obstacle. Here, we’ll explain not only what closing costs are, but more importantly, how to avoid paying them!

What are Closing Costs?

Closing costs are additional fees a homebuyer is responsible for, outside of the down payment, at the time of closing. They include things like lender fees, title fees, government fees, and prepaid items such as property taxes and homeowner’s insurance. See below for a more conclusive list of closing costs you may encounter.

Lender Fees
• Credit Report Fee
• Application Fee (if applicable)
• Origination Fees (if applicable)
Appraisal Fee
Flood Certification Fee
Title Fees
• Chain of Title
• Owner’s Title Insurance (typically paid by the seller in Michigan)
• Lender’s Title Insurance
• Closing Fee
• Courier Fee
Government Fees
• Recording Fees
• Transfer Tax (typically paid by the seller in Michigan)
Real Estate Broker Fees (if applicable)
Prepaid Items
• Per Diem Interest
• Property Taxes
• Homeowner’s Insurance
• Tax Prorations (to reimburse the seller for taxes they already paid)

Related: Transfer Tax Calculator and Title Insurance Calculator

How Much are Closing Costs?

Closing costs vary based on factors such as loan amount, location (state and locality) of the property, and lender fees. Total closing costs typically range between 3-6 percent of the sale price. As stated above, not all fees apply in every loan situation. For instance, here in Michigan, title insurance and transfer taxes are typically paid by the seller.

Ask your buyer’s agent about what (if any) fees their brokerage charges for their services, as their administrative fees can range up to $500. Lender fees can also have a large impact on a homebuyer’s total closing costs. Here at Riverbank Finance, we don’t charge any additional lender fees for most loan programs! Be sure to ask your loan officer what fees you can expect to pay for their services.

Can I Avoid Paying Closing Costs?

There are several ways in which homebuyers can avoid paying closing costs. The most common way to do this is to request seller paid closing costs when writing an initial offer on a property. Each loan program is different, but allows for a percent of the purchase price to be given back– up to 3% on Conventional, 4% on VA, and 6% on FHA and USDA. For example, if you are purchasing a $200,000 home with a VA mortgage, you can request seller paid closing costs of up to $8,000.

Homebuyers should also speak with their loan officers about no-closing cost loan programs. By utilizing lender credits, buyers can reduce or even eliminate their closing costs altogether—ask your loan officer if you qualify for lender paid closing costs! Here at Riverbank we charge NO APPLICATION FEES and most of our loan programs have NO LENDER FEES.

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To apply for a Mortgage or Refinance with NO closing costs, call Riverbank Finance today at 1-800-555-2098.

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VA Loans Just Got Better

 

For eligible servicemembers, veterans, and surviving spouses, the existing VA home loan program just got better! The Department of Veterans Affairs (VA) has introduced a new policy regarding how student loan debt affects mortgage eligibility.

Related: VA Loans for Military Veterans

VA loosens Guidelines for Student Loans

The new policy makes it easier for VA eligible borrowers to obtain a purchase or refinance loan, by changing the way student loan monthly payments are calculated. Prior to this change, 1% of the total student loan debt had to be counted toward the borrower’s debt-to-income (DTI) ratio each month, regardless of actual monthly payment structure or deferment. Now, however, the payment will be calculated based on 5% of the total student loan debt, divided by 12 months. Clear as mud, right?

Lets do some math!

For example, lets say John has $65,000 in student loan debt. Formerly, his monthly student loan payment would have been $65,000 * 1% (.01) = $650. Now, his payment will be $65,000 * 5% (.05) / 12 = $271.

What if John is on an income-based repayment structure, and only pays $250 per month? The new policy also allows a statement from John’s student loan servicer to be provided, allowing the calculated payment to reflect the actual loan terms.

What if John’s student loans are in deferment? If his repayment is scheduled to begin within 12 months from the estimated closing date, we must use the 5% / 12 months rule. If not, however, the payment can be omitted altogether if written evidence can be provided that repayment will be deferred at least another 12 months from the closing date.

By changing the way student loan payments are calculated, more VA eligible borrowers will qualify, and for a larger amount. Check out our VA Mortgage Calculator to estimate your monthly payment on a desired home purchase.

What is a VA home loan?

VA home loans are originated by private lenders, banks, and mortgage companies, but the VA guarantees a portion of the loan, allowing us to offer you more favorable terms. VA purchase loans help you buy a home with a low interest rate, without requiring a down payment or private mortgage insurance (PMI). There are also special VA loan programs for Cashout and Streamline Refinances.

Who is eligible for a VA home loan?

Active servicemembers, veterans, and surviving spouses are eligible for VA home loan programs, with a valid certificate of eligibility (COE). Length of service or service commitment, duty status and character of service determine each veteran’s eligibility for specific benefits. All VA borrowers are still subject to the minimum credit score requirement of 580 and sufficient income levels to cover expected monthly obligations. For more specific information on eligibility and requirements, visit the VA benefits website.

For More Information Visit the VA Student Loan Announcement.

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To apply for a VA Mortgage or Refinance call Riverbank Finance today at 1-800-555-2098.

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Should I Payoff my Mortgage Early?

 

Should I pay off my mortgage early? How much money will it save me? How much extra should I pay each month? If I pay an extra one hundred dollars each month, when will my mortgage be paid off? As you can imagine, we get these questions a lot. They are all excellent questions, but the answers vary depending on the homeowner. Here, we’ll address some things to consider before paying off your mortgage early.

Debt-free living sounds like a dream, but even if it is financially feasible, is it the best choice for you? Paying off your mortgage early will save you the interest expense you would have incurred over time; and the higher your interest rate, the more you stand to save. If your interest rate is low, however, sending any excess cash to your mortgage servicer may not be your best option.

Related: Refinance your mortgage with FHA Streamline

So, what else could you do with that extra cash? Speak to your financial advisor about your goals for retirement. When discussing investment options, you may be surprised to hear that the expected return on some portfolios may be greater than the savings you’d see by paying your mortgage off early.

How long do you plan to stay in your home? If you’re still in your first home, and you don’t anticipate ever paying off the mortgage, it doesn’t make much sense to overpay. Conversely, if you’re in your ‘forever home’ adding a little extra to your monthly payment could mean significant savings down the road.

When it comes to debt, mortgage debt is the best kind of debt to have, but let’s be honest—it’s still debt. If it’s going to help you sleep at night, and you can afford to payoff your mortgage, then by all means, do it! Have a mortgage burning party! Apparently that’s a thing.

So you’ve weighed your options and decided to pay down your mortgage—great! Use our amortization schedule calculator to determine how much sooner you will pay off your loan by paying extra monthly. Enter your total loan amount, interest rate, loan term, and open the advanced calculations to add your extra principal payments (monthly). After you click calculate, scroll down to see the number of months it will take to pay off your mortgage.

Let’s say, for example, you have a 30-year mortgage of $160,000 at a 4.25% interest rate. If you pay an extra $100 each month, you will pay off your loan in approximately 289 months, or 24 years.

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To apply for a Mortgage or Refinance call Riverbank Finance today at 1-800-555-2098.

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Use Your Tax Refund as a Down Payment on a Home

Use Your Tax Refund as a Down Payment on a Home

One of the biggest roadblocks to homeownership for prospective first time homebuyers is the down payment. Given the cost of rent, utilities, student loan debt, and many other expenses, it is hard to save up thousands of dollars for a down payment. Some first time homebuyers are able to receive a downpayment gift from a family member, but not everyone is so fortunate. How then, can a prospective homebuyer purchase a home? Enter, tax season. The time of year every American loves to hate.

How Can my Tax Refund Help me Purchase a Home?

Whether you’re receiving six-hundred or six-thousand dollars in this year’s refund, it could mean the difference between renewing your lease or becoming a homeowner. If you’re leaning toward the latter, deposit your tax refund in your bank account and consult a loan officer about what to do next. Whatever you do, DON’T spend it, move it, or withdraw it in cash. Below are some examples of what you could do with it:

  • Add it to your reserves
  • Pay off debts to reduce DTI and increase chances of qualifying
  • Pay down credit card balances to raise credit scores
  • Pay for loan closing costs
  • Put toward your down payment
  • Create an emergency home repair fund

Be sure to discuss these options and others with your loan officer before making any major decisions with your refund. Each borrower’s situation is different—sometimes it is better to pay off a debt to qualify, while others would be better off with a larger down payment.

Mortgage Programs with Low to No Down Payment

  • VA – no down payment
  • USDA – no down payment
  • FHA – as little as 3.5% down payment
  • Conventional – as little as 3% down payment

Related: Purchase a home with zero down payment 

The National Association of Realtors reported a median sales price of $232,200 in 2016. The required down payment on this home would be $8,127 with an FHA loan, but zero with a VA or USDA loan. If you choose to pursue conventional financing, you’ll need $6,966 for 3% down, $11,610 for 5% down, $23,220 for 10% down, or $46,440 for 20%.

What if my refund isn’t enough?

Given the increases in home values and interest rates in recent years, a tax refund may no be enough to rely solely on for a down payment on a home. If this sounds like your situation, do not give up! Speak to one of our loan officers, who will gladly help you create a strategic plan for getting pre-approved and purchasing when the time comes.

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To apply for a Mortgage or Refinance call Riverbank Finance today at 1-800-555-2098.

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Housing Inventory Reaches 18-Year Low

Housing Inventory Reaches 18-Year Low

The number of active listings dropped again last month to the lowest level since 1999, according to the National Association of Realtors.  Only 1.65 million homes are available for sale, which equates to roughly 3.6 months of inventory nationwide.  This figure is downward from the 3.9 months of inventory reported in December 2015.  A healthy, balanced market should have about six-months of inventory.  See NAR’s infographic below for additional statistics on national home sales.

Housing Inventory in West Michigan

Here in West Michigan, the situation is even more dire. According to statistics from the Grand Rapids Association of Realtors, we closed out 2016 with only 1.7 months of inventory. This means that if no additional homes entered the market for sale, at the current sales pace, all existing listings would be scooped up in less than two months. As shown by the graph below, inventory levels in West Michigan have been on a steep decline for the last decade.

You may be wondering, what is causing the housing shortage? Experts blame a combination of rising demand and stagnant new home construction. Single-family housing starts are growing, but only at a snail’s pace. Builders are still struggling to operate at pre-housing crisis levels, due to the loss of skilled trades and increased labor and materials costs.

What does this mean for the upcoming Spring real estate market? Prospective buyers can expect cutthroat competition—multiple offers, over list price, in less than 24 hours, without contingencies. There won’t be time for second showings or “sleeping on it”. And shopping for a home before being pre-approved? Don’t even think about it!

What about the remaining homes for sale?  Why aren’t they selling?  Many times, it is due to the condition of the home.  Most buyers do not have the time, desire, or cash to remodel a home top to bottom.  Enter renovation mortgage programs!  Renovation mortgage programs such as the Homestyle Renovation or FHA 203k programs allow borrowers to purchase and remodel the home of their dreams in one fell swoop.

How do Renovation Loans work?

Logistically speaking, a homebuyer, after agreeing to purchase a home for a set price, attains quotes from contractors to have renovations done. An appraisal of the home is then done, taking into account the home’s value once renovations have been completed. You can then borrow up to 96.5% of that appraised value. As soon as closing takes place, funds for renovations are placed in an interest-bearing escrow account and construction begins. Once renovations are complete, a final inspection takes place, the contractors are paid out of the escrow, and you move in to your beautifully renovated new home!

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To apply for a Mortgage or Refinance call Riverbank Finance today at 1-800-555-2098.

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