Tag: conventional loan

2019 FHA Loan Limits

FHA Loan Limits for 2019

FHA Loan Limits Increased for 2019

On December 14, 2018, FHA increased the FHA Loan Limits for new case numbers assigned on or after January 1, 2019. The FHA loan limits have increased from 2018 FHA loan limits of $294,515 to the new floor of $314,827 for 1 UNIT properties.

Related: See our FHA Mortgage Payment Calculator

FHA’s nationwide forward mortgage limit “floor” and “ceiling” for a one-unit property in Calendar Year 2019 are $314,827 and $726,525, respectively. The loan limits in Michigan are based on the number of units of the residence.

2019 FHA Loan and Conventional Loan Limits

MICHIGAN LOAN LIMITSFHACONVENTIONAL
1 UNIT$314,827$484,350
2 UNIT$403,125$620,200
3 UNIT$487,250$749,650
4 UNIT$605525$931,600

Michigan FHA Loan Limits

Michigan does not have any high cost areas therefore the limits for FHA Loans and Conventional Loans are the floor limits. FHA Loan limit in Michigan is $314,827. Conventional Loan Limits in Michigan is $484,350.

Michigan VA Loan Limits

VA loans in Michigan use the Conventional Loan limits of $484,350 set for 2019. All VA loans use the same conventional loan limits which are higher than FHA loan limits.

Michigan USDA Loan Limits

USDA Loans in Michigan are set at the Conventional Loan limits of $484,350 for 2019 as well. All USDA Loans use the same conventional loan limits which are higher than FHA loan limits and allow for more purchasing power.

For More Information on FHA Loan Limits

Give us a call today at 800-555-2098 or request information below!

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Select the links below for additional mortgage limits guidance for forward mortgages:

For Calendar Year 2019, the HECM maximum nationwide claim amount will be $726,525 for all areas. Refer to Mortgagee Letter 18-12 for more details.

How to get the Best Mortgage Loan

getting the best mortgageWhen 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.

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

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?

loan term

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?

escrows or waived 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?

picking your interest rate

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?

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.

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How to avoid or get rid of PMI

Private Mortgage Insurance (PMI) protects the lender in case you default on your loan. In most cases, unless you have a 20% down payment, you would have to pay PMI. But if that sounds like one more expense you can’t afford, here are some ways you can avoid PMI or get rid of it if you’re already paying for it.

Lender-paid PMI

The way PMI usually works is that you, the borrower, would have to pay an extra fee, along with your monthly mortgage. That extra fee can really squeeze your budget, especially if it’s already tight.

However, some lenders will offer to pay your PMI. Here’s how that works: They’d pay the full amount of the PMI up front, and you’d have to pay it back in the form of interest. It would slightly increase your mortgage rate, meaning that you’d have a higher monthly payment.

To figure out whether this is a good option for you, you’ll have to calculate whether the monthly cost of PMI would be more or less than the increase to your mortgage rate if your lender chooses to pay the PMI for you. Either way, the lender isn’t really paying it — you are. It’s just being distributed differently.

20% Down Payment on a Conventional Loan

The best, and most obvious, way to avoid PMI is to have a 20% down payment on a Conventional Loan. Since you’re putting down 20%, the lender wouldn’t need that extra protection against defaults. So you’d be in the clear.

However, if you couldn’t afford a 20% down payment and had to opt for an FHA Loan, for example, you could still get rid of your PMI once you reach 20% in home equity. Some types of loans have PMI attached to them for their entire lifespan, so in that case, you’d have to refinance to a Conventional Loan when you have 20% in home equity in order to drop the PMI.

VA Loans

If you are a veteran or are currently serving in the military, you are eligible for a VA Loan. The government created this loan program so that returning military members could purchase their own home with zero down payment, low monthly payments and more flexibility than traditional loans. The best part is, VA Loans require no PMI because the government provides a guaranty on the loan in case of default. So if you qualify, you can get a 15 or 30-year fixed VA Loan with zero down and no PMI.

The gift of equity

If you are purchasing your home from a family member, you can accept a gift of equity to lower the loan-to-value ratio. A gift of equity is when a family member sells you his or her house for a lower price than the listed price, and the difference can be used to make your down payment or pay off debt so you can qualify for the loan.

You can’t use a gift of equity on a VA Loan or Jumbo Loan. With an FHA Loan, you could also get a gift of equity from your in-laws or a non-profit organization. In any case, it must come with a letter that says it’s a gift.

For more information on avoiding PMI or getting rid of PMI on your existing loan, contact Riverbank Finance at (800) 555-2098 to schedule an appointment with one of our professional loan officers.

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How can I lower my monthly mortgage payments?

So, you’ve had a home for awhile, but you feel like your budget is just too tight. You scrimp and save, but it’s never enough. If the biggest expense you have is your mortgage, maybe it’s time to refinance your mortgage.

Refinance to a lower rate

Rates are very low. Right now, for a 30-year mortgage, the fixed rate can be as low as the high 3’s to low 4’s. Fifteen-year loans may even be in the high 2’s. Refinancing may be a great way to lower your overall mortgage payments by dropping your interest rate. This could help to save you thousands over the life of your loan. If your interest rate is over 4.5% now is a great time to review refinance options.

Drop your PMI

The only type of mortgage where Private Mortgage Insurance (PMI) drops off when you have 20% equity is the Conventional loan. Other types of loans, like the FHA, require PMI for the life of the loan. PMI usually costs 0.5 or 1% of the entire loan. It protects the bank from defaults. For you, it’s an extra cost — one that, once you’ve paid off 20% of the original loan value, you can refinance to remove. While it may not seem like a lot of money, 1% of a loan over the life of a 30-year mortgage can really add up over time. 

Extend your mortgage term

One reason folks often have trouble paying their monthly mortgage is that they think that a 15-year term is better than the 30-year. While it’s true that a 30-year mortgage takes longer to pay off, the monthly payments are lower. If your goal is a lower monthly budget, switching from a 15 to a 30-year will certainly do the trick. The only downside is the term of the loan is longer if you pay the minimum payments.

Also, if you already have a 30-year mortgage and refinance to a new one, you could still reduce your monthly payments.

Refinance from an FHA loan to a Conventional loan

You may have started with bad or low credit when you initially bought your house and had an FHA loan as the result. Or maybe you didn’t have enough money for a larger down payment. As your credit improves, you could have an opportunity to refinance your loan to a conventional mortgage. There are two advantages when refinancing an FHA to a Conventional loan: First, you could get rid of the Private Mortgage Insurance payments if you’ve paid 20% of the mortgage. Secondly, the interest rates for a Conventional loan may be lower than they are for FHA loans.

If you are thinking about refinancing your mortgage, contact one of our professional loan officers at 800-555-2098 to schedule an appointment. We can sit down and look at your financial situation and help you figure out the best way to lower your monthly mortgage payments.

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Why You Shouldn’t Buy The Cheapest Home

If you don’t have a lot of money and you’re in the market for a new house, you may be tempted to buy the cheapest home you find with the intention of fixing it up. However, just because a house is cheap doesn’t mean it’s a wise investment. Here are a few things to watch out for when considering the cheapest home:

Less Money, More Problems

The cheapest home is usually cheap for a reason. It’s always wise to hire a professional to inspect the home before you buy it, just in case the house has any serious issues. Ugly paint colors and outdated carpeting are easy, cosmetic fixes, but structural problems could turn your “new” home into a money pit. Why buy an $80,000 home with $20,000 in repairs, when you can buy a $100,000 home that is move-in ready and save yourself the trouble?

Not Livable? Not Approved

When you buy a home with a conventional mortgage, the appraiser will inspect the house to figure out its market value. When you buy a home with an FHA mortgage, the appraiser will inspect the house to find out its market value and to make sure it meets the Federal Housing and Urban Development (HUD) standards for health and safety. That means it has to be livable for everyone moving into the home.

Here are a few things they look for in the appraisal, according to HUD guidelines:

  • They want to make sure that the lot is graded so that any moisture would drain away from the house and not flood it.
  • Bedrooms must have some kind of access to the outside, so that everyone can escape in case of a fire. Bedroom windows are acceptable, as long as they’re large enough for a person to fit through them.
  • Lead-based paint is still present in many homes built before 1978, and it still poses a health risk. If there’s any damaged paint, including peeling or chipping, you’ll have to get it fixed in order for the loan to get approved.
  • Steps and stairways must have handrails.
  • The heating system must be sufficient enough for the home to be comfortable for its occupants and good for their health.
  • The roof must be in acceptable condition, without leaks and moisture, and should be easy enough to maintain in the future.
  • The foundation also must be able to withstand any normal amount of weight placed on it, and it should be in acceptable condition.

Generally, if you’re buying a cheaper home and you know it’s going to need some fixing, just make sure you’re not buying something that’s going to give you more headaches than it’s worth. If you’re going to spend that much money on repairs, you might as well buy a slightly more expensive home that you can move into comfortably.

For more information on the FHA loan or to find out whether the home you’re considering fits the livability guidelines, contact one of our mortgage officers at (800) 555-2098.

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Invest in Property with a Minimum Down Payment

Two weeks ago, we discussed how first-time home buyers and those with little money could buy a house with a small down payment. For those of you who have a large savings account and excellent credit, here are some options for investing in property, whether it’s a new home or a second home, with a minimum down payment.

Conventional Mortgage Down Payments

Conventional mortgages are best for those with perfect or near-perfect credit. If you have at least 20% down payment, you can avoid paying for PMI (private mortgage insurance). The federal government does not guarantee or insure this kind of loan, and it’s limited to loans up to $453,100. Those buying multi-unit homes can qualify for larger loans, though. The minimum down payment required for a conventional mortgage is 3%, although Riverbank Finance allows you to put down as little as 1% (see Conventional 1% Down Mortgage).

Jumbo Loan Down Payment

A loan of more than $453,100 is called a Jumbo Loan, according to Fannie Mae’s guidelines. Most banks do not have jumbo mortgages, but Riverbank Finance specializes in it. There are many options for jumbo loans, including a 40-year fixed rate, 30-year fixed rate, 15-year fixed rate, 3/1 Jumbo ARM, 5/1 Jumbo ARM, 7/1 Jumbo ARM, and an interest-only Jumbo Loan. You will need at least 10% down payment to qualify for most jumbo loans, although 20% is encouraged. However, if you’re buying a home in a high-cost area, such as Hawaii, California, Alaska, or Guam, you may not need a jumbo loan at all.

Vacation Home Down Payment

If you want to invest in a vacation property for personal use, Riverbank Finance allows for a minimum 10% down payment, although you can waive PMI with a 20% down payment. The requirements are a bit stricter here: You can’t have any recent foreclosures or bankruptcies, you must provide documented banking or retirement assets, your DTI (debt-to-income ratio) is limited to 45%, and the property you’re considering needs to be in acceptable condition.

Investment properties Down Payments

If you want to buy investment properties to rent to other people, you will need to have at least 20% down payment with Riverbank Finance. Your total DTI cannot exceed 45%. Freddie Mac requires you to have at least two years of landlord experience, documented in your tax returns, to consider any projected rent as your income. However, Fannie Mae does not. You must buy the property as an individual, not an LLC, and you cannot receive any amount of the down payment as a gift. You will also need at least six months’ worth of house payments reserved in savings to qualify.

For more information or to speak with a loan officer about any of these mortgage options, call Riverbank Finance at (800) 555-2098.

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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!

Apply for a Mortgage

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

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New MSHDA Grant | MSHDA Down Payment Assistance Flaws

 MSHDA Down Payment Assistance

What everyone is referring to as the new MSHDA grant is not free money. Actually, it is not even a grant. It is a second mortgage that may be used in place of a down payment when buying a new home in the form of down payment assistance. Contrary to what most people assume, it is not free money and must be repaid.

What is the MI Next Home Program?

The MSHDA MI Next Home Program is a program announced February 24th, 2014.  It was highly publicized making its way onto local news channels and newspapers.  Many potential home buyers will have heard of this program so it is crucial to know the details so time is not spent under the assumption that they can received the funds only to find out they do not qualify for the program and cannot complete the closing.

Michigan State Housing Development Authority’s new program is a down payment assistance loan that may be used to pay the down payment, prepaid items and closing costs when buying a new home. An eligible borrower may receive a second mortgage up to $7500 or 4% of the purchase price, whichever is less. This money will be funded to the escrow agent at close and a lien will be recorded against the property. When the property is sold or transferred, the homeowner must repay this money.

Who is Eligible for the MSHDA MI Next Home Program?

While there are some people that may be eligible for the $7500 down payment assistance from the MSHDA MI Next Home Program, many will not qualify due to income limits, too much in assets or even not enough in assets.

A home buyer that may be eligible for the new program must have owned a home in the past. They must be under the income maximum requirements and loan size limits. They also must be able to cover a minimum of 1% of the loan amount with their own assets but still not have assets available to cover the full down payment themselves.

Downsides to the Down Payment Assistance Program (DPA)

While many homeowners would like to keep extra money in their pockets when purchasing a home, the down payment assistance program may not be a wise choice for most home buyers even if they are eligible. The downsides to this DPA program include, potentially higher rates, potentially higher costs, less loan options, a lingering lien that never goes away and unexpected loan denials.

MSHDA Downsides to Consider

  • Not Free Money – It is a Second Lien that MUST be repaid
  • Property cannot be transferred without paying off the 2nd mortgage
  • Property cannot be refinanced without paying off the 2nd mortgage
  • Interest Rates may be Higher
  • Borrower is Required to pay a minimum of 1% in closing costs out of pocket
  • Borrower may not have funds available to cover the down payment on their own
  • Borrower cannot receive down payment funds from the sale of their current home
  • 2nd mortgage never goes away until it is repaid
  • Conventional financing is not available
  • May delay the Home Buying Process as it must be approved by MSHDA after full loan approval
  • There are Income Limitations
  • There are purchase price limitations

MSDHA sets the mortgage rates for the first mortgage that goes with the down payment assistance loan. There is no rate shopping or qualifying for a better rate if you have better credit – it is a take it or leave it rate option.  Below is a comparison of a Rural Development loan with the DPA program and a standard Rural Development mortgage. On Rural Development loans, mortgage insurance, taxes and home owners insurance will be the same so let’s compare just the principal and interest of the loan itself.

Standard RD Loan
MSHDA DPA RD Loan
Interest Rate3.75% / 4.138% APR**4.75% / 4.857% APR**
P&I Payment$ 708.57$ 798.12
Down PaymentZero DownZero Down + 2nd Mortgage
Borrower Required to Pay $0 (seller paid costs)1% = $1,500+ Minimum
Cost Over Life of Loan $255,085.20$287,323.20 + $6000 DPA

**Note: MSHDA rate quoted on 3/22/14 from Michigan.gov | Standard RD Loan quoted with similar costs of 1% origination, 740 credit score for a 100% financing USDA Rural Development loan in Michigan with a 30 day rate lock on 3/22/14. This example is for illustration purposes only. Exact rates, fees and costs may vary based on individual circumstances. Not all will qualify. For buyer to have $0 cost it may require a seller contribution at close. Contact your loan officer for a full mortgage quote based on your scenario.

As you can see from the above example, a home buyer that uses the MSHDA down payment assistance loan may end up paying an additional $32,238 in mortgage interest over the life of the loan. In additional to the extra interest paid, you still have to repay the $6,000 second mortgage. A better alternative may be to do a standard RD loan with seller paid closing costs built into the purchase agreement.

Flaws of the New MSHDA DPA Program

There are several flaws of the new MSHDA DPA program that could affect home buyers from qualifying for the program. Many times, real estate agents and home buyer will not realize that they do not qualify until they already have boxes packed and a purchase contract signed. This can be a very disappointing event in the home buying process.

Borrower Cannot Have Funds of Their Own Available for the Down Payment and Closing Costs

To qualify for the new MSHDA DPA program, a home buyer cannot have the funds available to cover the down payment themselves. This includes in any bank accounts, savings accounts, joint accounts, stocks, bonds, mutual funds, funds from gift letters, money borrowed from IRA/401k accounts, CDs, trust funds and the big kicker – not even equity in real estate. This is a major flaw considering the program is designed for home owners to upgrade or downgrade their homes and have the option to move into a house more suitable for their situation. What many people do not realize is that if you sell your current home and receive money from the sale, this automatically disqualifies you from the program. Even if you own some vacant land as real estate and it has no mortgage, the equity in this real estate may disqualify you from receiving the MSHDA loan.

The Property Cannot be Transferred or Refinanced Without Paying off the MSHDA mortgage

In today’s society it is a sad fact that 50% of all marriages end in divorce. With this statistic, the MSHDA grant could cause a large problem allowing one spouse to fully take over the house in the case of a divorce. The MSHDA 2nd mortgage that is placed on the home requires full repayment upon the transfer of a deed on the property. To record a standard quit claim deed and transfer ownership is not permitted.

This also is the same for those that wish to refinance their MSHDA mortgage. With a higher rate loan for the DPA program, a home buyer may want to refinance their mortgage to a lower rate or term if the opportunity presents itself. This is not allowed if a homebuyer uses the MSHDA funds. They will not make any exceptions in subordinating the 2nd mortgage lien that they place on the home which would be a requirement to refinancing. The home owner must repay the 2nd mortgage in full to qualify for a refinance.

Alternatives to the MSHDA DPA program

If a home buyer chooses not to apply for the MSHDA program or is disqualified for the program there are many great alternatives for home loans. One great mortgage option is the USDA Rural Development Loan which is a zero down mortgage program. A home buyer may be able to buy a home with zero down and nothing out of pocket. USDA mortgage rates are very low and the sellers may pay the closing costs.

If a home buyer is selling their current home and receiving a large chunk of money, they may want to consider a conventional mortgage. With 20% down there will be not mortgage insurance (PMI) which will help keep the payment low and avoid extra costs.

For more information on alternative mortgage options contact Riverbank at 1-800-555-2098 or apply for a mortgage online.

Summary: MSHDA Grant and Down Payment Assistance Flaws

The New MSHDA program is not free money that home buyers can receive when buying a home; it is a 2nd mortgage that must be repaid. There are limitations on income and assets to qualify for the program. If a homebuyer has money in the bank or even receives cash from the home they are selling, they may be denied financing. The rates may be higher for the DPA program than what a standard mortgage can offer and it may require the home buyer to pay more out of pocket than if they buy with a standard mortgage (See the MSHDA comparison chart above). If a home buyer does qualify for the program, it may cause unforeseen issues which may prevent the home buyer from transferring the property or even refinancing.

While there are some home buyers that will be able to utilize the new MSHDA DPA program, many will not qualify and will have great alternatives available. Before you apply for MSHDA it is important to know all the details and how it will affect you and your family now and in the future.

Where to Find more Information about MSHDA

Information about the new MSHDA program was communicated from Michigan.gov and a MSHDA employee, Sarah Nelson Bohné from the Homeownership Division. Information is reliable however not guaranteed and should be verified individually based on your circumstances.