Michigan Mortgage Blog



Here we are again discussing earnest money deposits.  I have written about earnest money deposit before here.  I have also talked about bank statements before here and not to deposit any funds that cannot be proven.  However, I feel there is still some information that needs to be explained to fill in the puzzle pieces.

When it comes to documenting an earnest money deposit, sometimes it's a little unclear as to what needs to be provided and why.  Let's dig in!

When you write an earnest money deposit and you are obtaining a mortgage, you have to prove the source of that earnest money deposit.  Seems simple, right?  Well, what if you deposited cash just before writing that earnest money deposit check and without that cash you would not have had the funds to write the check?

If the cash cannot be proven with a proper paper trail (which almost never happens), that earnest money deposit is no good.  Now you have to replace the earnest money deposit with documented funds.  This can cause quite the paperwork mess and should be avoided along with receiving money from anyone other than an immediate family member.  Money from an immediate family member is considered a gift and with a gift letter and proper paper trail is acceptable for use in a mortgage transaction.

IMPORTANT!  The amount of non-proven cash you deposit is deducted from your available balance.  So, if your bank statement balance shows $6,000 and you deposited $3,000 cash, you now only have $3,000 to work with for the purchase of your home.

Once you have a documented earnest money deposit and it has cleared your account, you will need to provide an updated bank statement showing where the earnest money deposit cleared your account. On this statement the underwriter will also be looking for  your updated statement balance after the money cleared to make sure you show enough funds to close the transaction.  Most of the time an updated bank statement is not available, so an account activity printout is acceptable.  Here is what the printout must show to be acceptable:

  1. The web address in the header or footer of the printout to show that it came from your online account.
  2. Your first and last name, account number or partial account number to match up to the actual statement you provided.
The printout MUST cover the activity period from the closing date of the last actual statement you provided through current.  There can be NO GAP in asset activity.

IMPORTANT! Any new deposits that appear on this bank printout must also be proven.  Again, refer to my other article regarding bank deposits during a mortgage application for further information.

I have seen it more than once where buyer's think they are past the point where a new bank statement will be needed and deposit funds that they cannot prove.  This will cause delays and sometimes a shortage of funds to close.

I hope this article helps you to have a smoother mortgage/real estate transaction.  If you should have any questions, please contact me at Jim@LoanJim.com or 810-444-0024.

Need to pre-qualify for your Michigan mortgage?  Simply click here to see how much and for what programs you qualify for.  No credit check required.

Posted by Jim Papatheodore on November 13th, 2017 11:26 AM

So, you're looking to purchase a home and you would love to use that first time home buyer program, but darn it you owned a home 5 years ago that you sold.  Well, do I have good news for you!  A first time home buyer is defined as someone who is purchasing a home as a primary residence that has not had any ownership in a property in the past 3 years.

Really, there are not too many loan programs out there today that require you to be a first time home buyer, however there is the conventional 3% down and the Michigan State Housing Development Authority (MSHDA) does have down payment assistance options for first time home buyers and repeat home buyers.

If you are looking to purchase a home in Michigan, complete our pre-qualification request form to see what first time home buyer options you may qualify for!
Posted by Jim Papatheodore on November 9th, 2017 11:24 AM


40,000,000 Credit Scores Could Improve on July 1st, 2017


Did your credit score improve July 1st? Here is why.

Starting July 1 another portion of the National Consumer Assistance Plan will go into effect and it should have a big impact on credit scores. The Repositories; Equifax, Experian, and TransUnion will exclude public tax lien and civil judgment data that doesn’t meet the new minimum reporting standards. According to the Consumer Data Industry Association, new and existing tax lien and civil judgment data must include a person’s name, address and either a Social Security number or date of birth in order to be included in credit repository file.

What can you expect?

 

  1. The National Consumer Assistance Plan is designed to reduce credit reporting errors by requiring all public records have more information about the consumer they are reporting on. Data reports must include a person’s name, address and either a Social Security number or date of birth.
  2. Consumers that have had a tax lien filed against them, have a 50 percent chance that it was and error and won’t show up on their credit report anymore.

  3. Improved dispute process, the repositories will now share disputes between them to improve data accuracy. The Repositories will also, monitor data furnishers for adherence to the announced reporting requirements and take corrective actions against data furnishers for noncompliance.

  4. Medical bills will now be required to wait for 180-days before they are allowed to be recorded on a credit report as due for collection. That should give consumers and their medical provider’s more time to resolve insurance payments and other billing issues before the debt shows up on the repository file.


Last September, The National Consumer Protection Plan limited the debt that could be reported without the proper agreement with the consumer. That stopped the reporting of things like library fines and traffic tickets.  This agreement helps consumers because it makes the credit profiles more accurate. Stay tuned to our Blog for more information on the National Consumer Assistance Plan there is more to come. If you are ready to start the mortgage process now and get a Fannie Mae conditional approval in just minutes try our SNAP mortgage process.

Posted in:Credit and tagged: Credit Scores
Posted by Jim Papatheodore on July 31st, 2017 2:12 PM

Fannie Mae announced last week that they would provide relief for those looking to purchase or reduce student loan debt.  Before April 27th, 2017 a home buyer looking to purchase a home would have to count 1% of their student loan balances as a monthly payment and include that in their debt ratio regardless if the payment was a lower income based repayment.  That was a huge hurdle for a lot of home buyers with student loan here in the Fenton Michigan area.  With the changes released last week, we can now use whatever payment appears on the credit report!  However, if the credit report reflects a $0 monthly payment because the loans are currently not in repayment, we still have to count 1% of the balances in the monthly payment.

As of today, FHA or Rural Development have not followed Fannie Mae's lead, but hopefully will soon.  VA loan qualification will still allow military and veteran home buyer's to exclude student loan payments from their debt ratio if they are deferred for a minimum of 12 months from the date of closing.  If a parent has been paying your student loan payment for your monthly for a minimum of 12 months, the monthly payment may be excluded from your debt to income ratio with proof of the 12 months of payments.

To help assist current homeowner's with reducing student loan debt, Fannie Mae is allowing current homeowner's to pull cash out of their homes to pay off student loans without the typical increased interest rate that comes along with a cash out refinance.  The maximum loan that a borrower can have is 80% of their current homes value which must include their current mortgage loan balance, closing costs (if you do not pay them out of pocket or have the lender credit them) and student loans.  With values on the rise, this may be a good opportunity for some current homeowner's to payoff high interest student loans and deduct the interest on the new mortgage loan balance.

For more information, contact me at 810-444-0024 or Jim@LoanJim.com.

Jim Papatheodore
Michigan Mortgage Loan Officer
NMLS ID 131478
Serving Fenton, Brighton, Grand Blanc, Clarkston and surrounding areas of Michigan.

Posted by Jim Papatheodore on May 1st, 2017 9:29 AM
Mortgage rates continue to get better after last weeks Fed announcement raising the rate by .250%.  But, wait a minute, did you say that mortgage rates continue to get better after the Fed RAISED the rate?  Yes, because when the Fed raises the rate it is raising the rate at which depository institutions lend other depository institutions overnight, more here on that.

While this is an important benchmark in financial markets and an important economic indicator, they do not directly affect long term mortgage rates.  In fact, when the Fed raised the rate last week (3/15/17) pricing for Mortgage Backed Securities (MBS) improved pushing long term mortgage rates lower.

Long term mortgage rates are affected by the trading of MBS.  MBS prices are not always accessible and you typically have to pay a company to receive updates for them.  So, the indicator to watch is the 10 year treasury.  As with most stocks, bonds and other investments MBS and the 10 year treasury is very news sensitive.  Typically, the higher the price goes, the higher mortgage rates go.  This is not always the case, but they do mirror each other most of the time.  More on the 10 year treasury here.

So, the next time the Fed says it will raise rates, understand that it may or may not directly affect long term mortgage rates.  More importantly, it's whether the MBS investors view the news as positive or negative for the economy.

Jim Papatheodore
Mortgage Loan Officer
NMLS ID 131478
www.LoanJim.com
Jim@LoanJim.com
810.444.0024

Serving Fenton, Grand Blanc, Holly, Linden, Brighton, Clarkston and surrounding Michigan areas!

Posted by Jim Papatheodore on March 21st, 2017 12:26 PM
What is an earnest money deposit?  Simply put, an earnest money deposit or EMD for short is a deposit that you provide when making an offer on a property you would like to purchase.  This shows the seller you are serious about purchasing their home.

If you are obtaining a mortgage, the EMD is a credit towards your bottom line costs.  Because of this, you must provide proof that the EMD came out of your account to receive the credit towards your down payment and/or closing costs.

Sometimes this makes things difficult for home buyer's that are unaware of the mortgage process.  The best way you can provide an earnest money deposit it by writing a check from YOUR own checking account or withdrawing the funds from YOUR own checking or savings account with a cashier's check.  If you have cash saved at home, do not deposit the cash into your bank account to use as your earnest money deposit.  It is almost never acceptable to use cash in a mortgage transaction.  You can read more about bank deposits during a mortgage transaction here.

An earnest money deposit can come as a gift from an immediate family member.  The family member (donor) will provide a copy of their bank statement showing where the funds came out of their account and a gift letter will be complete between you and the donor.

The earnest money deposit is an important part of the mortgage process, but needs to be provide property to your Realtor to ensure less headache for you during your real estate transaction.

If you have further questions about earnest money deposits, please contact me at the information below.

Need to pre-qualify for your Michigan mortgage?  Simply click here to see how much and for what programs you qualify for.  No credit check required.

Jim Papatheodore
Mortgage Loan Officer
NMLS ID 131478
www.LoanJim.com
Jim@LoanJim.com
810.444.0024

Serving Fenton, Grand Blanc, Holly, Linden, Brighton, Clarkston and surrounding Michigan areas!
Posted by Jim Papatheodore on February 13th, 2017 11:39 AM

My buyer is using a VA loan and I just received a call from my loan officer and they said that the VA appraiser initiated Tidewater?  What the heck is Tidewater?  In a simple explanation, when an appraiser initiates Tidewater, that means that they are having a difficult time finding comparable closed sales to bring the value in at the sale price.

Starting in 2003, Tidewater allows the appraiser to reach out to the point of contact (typically the underwriter) and allow them the opportunity to provide additional comparable sales to justify the sale price before issuing the appraisal (notice of value or NOV).  The underwriter will then reach out to the loan officer and ask them to get with the buyer's agent to provide additional comparable sales to assist the appraiser to justify the value (sale price).

It's actually kind of nice to have the notice upfront.  Conventional, FHA and Rural Development appraisals will just come in at whatever value the appraiser can find comps for and you would have to dispute the value if it comes in low.  Tidewater at least allows you the opportunity upfront to provide the additional comparable sales to hopefully help with the value before receiving the appraisal.

You will only have 2 days to provide the additional comparable sales to the appraiser or they can go ahead and complete the appraisal and issue the NOV to the VA, so act quickly!

If you have questions, please contact me at the information below.


Jim Papatheodore
Mortgage Loan Officer
NMLS ID 131478
www.LoanJim.com
Jim@LoanJim.com
810.444.0024

Serving Fenton, Grand Blanc, Holly, Linden, Brighton, Clarkston and surrounding Michigan areas!


Posted by Jim Papatheodore on January 28th, 2017 11:30 AM


The next time you are in the Fenton area dropping off documents to my office or are just out and about, you've got to give Crust a try!  I was there the other day and got the #1 Bialy Egg Sandwich with Vermont Cheddar and Applewood smoked bacon....WOW!  Thank you can I have another?!

They serve breakfast and lunch, have fresh loaves of bread, pies, sandwiches, coffee, cookies, cakes and a lot more!

I love it because the everything is prepared using unbleached/unbromated flour that is non-GMO!  Crust produces over 120 different baked goods and all are handcrafted using traditional baking methods.

So, give it a shot or don't....but if you don't you are missing out!

Click here to learn more about Crust.

Jim Papatheodore
Mortgage Loan Officer
NMLS ID 131478
www.LoanJim.com
Jim@LoanJim.com
810.444.0024

100 S Adelaide St.
Fenton, MI 48430

Serving Fenton, Grand Blanc, Holly, Linden, Brighton, Clarkston and surrounding Michigan areas!

Posted in:General and tagged: Local Restaraunt
Posted by Jim Papatheodore on January 25th, 2017 6:03 PM


Introducing SNAP Mortgage!  We created SNAP Mortgage with convenience in mind.  Now you can combine a complete digital experience with the expertise of a local mortgage lender.

SNAP Mortgage enables borrower's to instantly retrieve the required documents and automates the mortgage process. Mortgage 1 Inc. is already a leader in Conventional, FHA, Rural Development and VA lending, we've created SNAP Mortgage to enhance the client experience.



Apply now for your conventional, FHA, Rural Development or VA home loan and receive your approval in minutes!


Jim Papatheodore
Mortgage Loan Officer
NMLS ID 131478
www.LoanJim.com
Jim@LoanJim.com
810.444.0024

Serving Fenton, Grand Blanc, Holly, Linden, Brighton, Clarkston and surrounding Michigan areas!

 

Posted by Jim Papatheodore on January 22nd, 2017 10:34 AM

When choosing a mortgage, most people choose the 30 year fixed option as it has been the industry standard for quite some time.  But, what about the 15 year mortgage?  Should you consider going with the 15 year over the 30 year?

Sure your payment will be higher than the 30 year, but how much higher?  Can you afford the 15 year payment and cut your loan term in half?  Did you know that the 15 year rate is lower than the 30 year rate (as of 1/10/17)?

Click here to read more about qualifying and the difference you will pay in interest!

For current Michigan mortgage rates and other 30 vs 15 year qualifying information, please contact me at the information below.

Jim Papatheodore
Michigan Mortgage Loan Officer
NMLS ID 131478
Jim@LoanJim.com
www.LoanJim.com
810.444.0024

Posted by Jim Papatheodore on January 10th, 2017 10:10 AM

UPDATE 1/20/17 - Within hours of being sworn into office, Trump repealed the decrease in FHA mortgage insurance premiums which was one of the last minute policy actions.  Read more here.



Great news!  The FHA will be lowering the monthly mortgage insurance premiums for loans closing/funding January 27th, 2017 and later.  The new rates are projected to save homeowner's $500 per year.


FHA increased the rate about 4 years ago to replenish a depleted fund after the foreclosure crisis.  Currently the monthly premium is .85% of the loan amount, divided by 12 and added to the monthly payment.  Now that premium will be .60%.



Click here to read more or click here for more information regarding Michigan FHA mortgage loans.




Posted in:General and tagged: FHAMichiganHome Loans
Posted by Jim Papatheodore on January 9th, 2017 11:29 AM

Since the election, mortgage rates have shot up about 1%!  Rates were so low and stable for so long, we forget that when they do increase, then can affect not only your monthly payment, but your purchasing power!


So, what happens when rates increase?  Let's take a look.....

Using a $150,000 loan amount as an example.  At a rate of 3.750%, the principal and interest payment would be $694.67.  At a 4.750% rate, the payment would be $782.47.  That's an increase of $87.80!  That's quite a jump if you are trying to stay within a budget.

However, that's not the only thing to consider with the recent rate increase.  How about purchasing power?  Let's say you qualified for a max mortgage payment of $694.67 at the 3.750% rate.  Now that the rate has increased and the payment has increased by $87.80, the max loan amount you will qualify for is $133,000.  That's a decrease of $17,000 in purchasing power!

If you have been shopping for several months and have not been in contact with your mortgage loan officer since the rate increase in November 2016, you may want to reach out to them and make sure that you still qualify for the amount you originally did and make sure your monthly payment is still affordable.


Click here to see how much you can qualify for (no credit check).

Feel free to contact me with questions at the information below.

Jim Papatheodore
Mortgage Loan Officer
NMLS ID 131478
www.LoanJim.com
Jim@LoanJim.com
810.444.0024

Serving Fenton, Grand Blanc, Holly, Linden, Brighton, Clarkston and surrounding Michigan areas!

Posted in:General and tagged: MortgageRates
Posted by Jim Papatheodore on January 7th, 2017 1:47 PM

Just released!!  USDA's Upfront and Annual Fees are Getting Smaller....

On October 1, 2016, both the upfront guarantee fee and annual fee for purchase and refinance loans will decrease.  USDA (Rural Development) is reducing the upfront guarantee fee from 2.75% to 1%, and the annual fee (charged monthly) from .5% to .35%.

Here is even better news.....

The underwriting system will be updated on August 31, 2016, to allow lenders to select and underwrite using the new fee schedule.

This is great news!  Not only are the fees decreased significantly, but as of August 31st, loans can be submitted using the new lower fees for borrower's that will be closing after October 1st.

So, apply for your Michigan Rural Development loan now by completing my online loan application and take advantage of the new low fees and one of the only zero down home loans available!

Please contact me with any questions at 810-444-0024 or Jim@LoanJim.com

Jim Papatheodore
Mortgage Loan Officer
NMLS ID 131478

Posted by Jim Papatheodore on August 23rd, 2016 12:58 PM
When it comes to a mortgage application, the bank statements might just be the single biggest document in question when they are reviewed by an underwriter.  If you have deposits that are not typical payroll deposits, you may be asked to prove where the money came from.

Here are some recent things that I have come across that should be avoided.

  1. Using cash for your earnest money deposit on a real estate contract.  The earnest money deposit must be from your own funds or a gift from an immediate family member.  You will need to prove that the earnest money deposit cleared your bank account.
  2. Obtaining money from anyone other than an immediate family member for your down payment, closing costs and/or earnest money deposit.  If you do obtain a gift from an immediate family member.  A fully executed gift letter is required, proof of the funds coming from the donor and proof of the deposit of funds into your account.
  3. Depositing cash saved at home.  While it seems harmless, this cash typically cannot be used unless there is proof of where it came from.
  4. Transferring money back and forth between different accounts.  Even though these can be proven, you will have to provide all bank statements that are involved in the transfer of funds.

These are just some of the recent things that I have come across.  Avoiding these things will help result in a smoother transaction which will save you from an unneeded headache during the mortgage application process.  If you have questions about what is acceptable during a mortgage transaction, please reach out to your loan officer or contact me at Jim@LoanJim.com.

Jim Papatheodore
Mortgage Loan Officer
NMLS ID 131478

Posted in:General and tagged: Michigan Home LoansMortgage
Posted by Jim Papatheodore on August 22nd, 2016 2:28 PM
There seems to be a lot of buzz right now about the changes at Rural Development regarding real estate broker charges.  Rural Development does not allow the buyer to pay you or your broker any admin/compliance fees. If there are seller concessions, the seller can pay it on the HUD (soon to be closing disclosure) just not the buyer.  Please contact me with any questions.
Posted in:General and tagged: Rural Development
Posted by Jim Papatheodore on August 10th, 2015 11:21 AM

Rural Development announced that the upfront guarantee fee will change from 2 percent of the loan amount to 2.75 percent of the loan amount beginning October 1st 2015.  The annual (monthly) fee will remain unchanged.

For any questions and any other information about Michigan Rural Development loans please contact us.

Posted by Jim Papatheodore on June 26th, 2015 8:23 AM

Rural Development made changes to the fees that are allowed to be paid by the seller.  These changes impact transactions where real estate offices charge a fee to the buyer for record retention, real estate compliance fee etc.  Here is the actual rule.....

The fee can be paid by the buyer, but cannot be included in seller concessions.  If the buyer is expecting their earnest money deposit (EMD) back at closing, which happens with Rural Development loans often, the real estate fee will be taken out of the EMD.

For example, if your earnest money deposit is $1,000 and the real estate compliance fee is $300, you would receive $700 back instead of your full $1,000 EMD.

Please contact me if you have any questions.

If you are interested in being pre-qualified for a Michigan Rural Development Loan, please click here.

Posted by Jim Papatheodore on March 11th, 2015 2:36 PM
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