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Understanding the Mortgage Process

Wednesday, April 26, 2023
by Tom Stachler,ABR,CDPE - Group One Realty Team

Understanding the Mortgage Process

Mortgages. Most of us need one in order to purchase property, a Home, or a business property. Technically speaking, a mortgage is a long-term financial agreement in which a homebuyer borrows money from the lender to purchase a property. The borrower must agree to make periodic payments of an agreed amount of money to the lender, usually monthly. These payments are typically calculated as an interest rate times the outstanding loan balance plus any fees and charges, such as points and origination fees. Visit www.LendAnnArbor.com to access a list of the county's Top Lenders. Pick someone at the top of the list and get started with your pre-approval today.

 

Mortgages also make it possible for people who are already owners to borrow against the equity in their current residences so they can embark on new projects or experiences with confidence. Read on for some information from real estate pro Tom Stachler.

 

 

Types of Mortgages

Fixed-rate mortgages have a fixed interest rate for the life of the loan. They are typically best for people who plan to stay in their homes for a long period of time or those who want stability and consistency with their monthly mortgage payments.

Citizens Bank explains that adjustable-rate mortgages have an interest rate that changes periodically based on market conditions. They can be good for people who expect their income or financial situation to change over time because they can take advantage of lower rates when they're available by refinancing before rates go up again.

FHA VA loans are insured by the Federal Housing Administration, which is a division of the Department of Housing and Urban Development. They offer lower down payment requirements and flexible credit guidelines and require private mortgage insurance, which is paid monthly as part of your mortgage payment.

Conventional mortgages are loans that do not have government backing. They offer a variety of loan types to suit your needs but require a higher down payment than an FHA or VA loan.

 

What to Have Ready When Looking for a Mortgage

Mortgage companies require a lot of documentation to see if you qualify for a loan and what type of loan you should get. They will also check to ensure there are no errors in the documents you provide them with. Some of the documents required are:

  • Pay stubs and proof of employment, and all other forms of income.

  • Bank statements for the previous 30-60 days

  • Copies of your credit report.

  • Documents showing loans, credit card debts, and all financial obligations.

  • A copy of your previous year’s income tax statement.

  • A letter stating any discrepancies or explanations for problematic items found.

 

What to Expect When Closing the Sale

Framework points out that the closing is the final step in the home purchase process, where you will sign all of the legal documents and receive keys to your new home. The closing usually takes place at a title company or lawyer’s office.

You will be asked to bring your original copies of all relevant paperwork from your lender, attorney, and real estate agent. You may also need to bring copies for any other parties involved in the transaction.

A title company representative will review all of your paperwork with you and explain what each document means. Then the title company representative will ask you to sign each document before they can proceed with the transaction. They may also ask that you sign some documents after they have reviewed them with you first.

 

How to Handle All Those Documents

Digital copies of all your documents will not only serve as a good backup for all the paper documents you have to contend with during the home-Buying process, but you will also be able to save money and avoid the hassle of printing out copies and delivering them in person. And digital copies of your documents can be easily shared with other people, with everyone being able to access them from any device, anywhere. The only thing you need is a scanner or a smartphone to make a digital copy of your document. 

It’s easy to organize those digital files by using a PDF editing tool that allows you to split a PDF. There are many such free tools out there to choose from, but you can save searching time by clicking this to discover how to complete the process in five quick and easy steps. With them, you can split a large PDF into multiple, smaller files, allowing you to quickly separate PDF pages. Once you save the file, you can rename, download, or share the new PDFs with others.. 

Understanding what mortgages are, as well as the different types of mortgages, can mean a big difference in how much you pay for one and can ensure you’re making the smartest financial decision. Then, being prepared for what to expect during the process and staying organized throughout can make for a much smoother home-buying experience. 

 

When you have a real estate need, question or need a Contractor Discount/referral, give Tom Stachler of Real Estate One and the Group One Realty Team the opportunity to help you with a recommendation or find your next home. Team up with Tom today by calling (734) 996-0000! or visiting www.TheRealtyTour.com

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Buying a New Home? Get Your Debt Under Control First

Friday, September 10, 2021
by Tom Stachler,ABR,CDPE - Group One Realty Team

Photo by Pixabay

 

Buying a New Home? Get Your Debt Under Control First

 

Buying a home is exciting — and the largest purchase most people make. If you have debt, you might wonder if buying a home is feasible. You can buy a house while you have debt, but taking steps to reduce or eliminate it eases the process and saves you money.

 

Looking to purchase a new home in the Ann Arbor area? Be sure to contact Tom Stachler for all your home-buying needs! Call (734) 996-0000 to learn more!  Our Area’s Best Lenders and rates can be found here at www.LendAnnArbor.com 

 

Interpret Your Debt

 

Before you can make a plan to pay down your debt, you need to understand it. Start by asking yourself a few questions:

 

  • Who do you owe?
  • How much do you owe?
  • What interest rates are you paying?
  • What are your monthly payments?

 

Check your credit report if you need help answering these questions. Once you fully understand your obligations, you're ready to construct a payment plan.

 

Prioritize Debt Payment

 

It can be tough to decide what debts to pay first. Using a debt payment method can help you design a strategy that works.

 

The debt avalanche method puts debts with the highest interest rates at the top of the list. You pay the minimum amount on all debts except the one with the highest rate, which gets priority until it's paid off. This technique saves money by eliminating the highest interest rate first.

 

The debt snowball method pays off the smallest debt first. While it might not target the debt with the highest interest rate, crossing debts off your list can be very motivating.

 

Remember that utilities and Rent payments must come first. Keep these accounts in good standing to prevent them from going to collections and adversely affecting your credit score.

 

Plan to set aside money in a savings account as you pay down debts. You'll need it to prepare for emergencies, and you need to save for a down payment on your home.

 

Create a Budget That Works

 

You can find many ways to create a budget, but they all revolve around tracking your expenses. Check your credit or debit card statements for a breakdown.

 

If you don't have enough income to pay down your debts, consider ways to reduce expenses or find ways to earn extra income — even temporarily — until they're paid.

 

It can be hard to stick to a budget. But saying “no” to some things now can mean being able to purchase a new home down the road. Be realistic, though, and don't deprive yourself. Include some money each month for personal enjoyment.

 

Evaluate Loan Options

 

Home loans generally fall into three categories:

 

  • Conventional loan: This loan has lower interest rates, but you may not be eligible if you have poor credit.
  • FHA loan: Regulated by the Federal Housing Administration, this loan requires smaller down payments and may be available to applicants with lower credit scores.
  • Special programs: These include USDA, VA, and local loans with options for low- to middle-income borrowers in certain categories.

 

You can also find ways to reduce your loan's interest rate. One method involves paying points on a mortgage. Also known as buying down the rate, you pay the lender a fee at closing in exchange for the lower rate. Paying points can be a good option if you plan to stay in your home for a while, but it depends on your current finances and type of loan. You can use a mortgage calculator to help you decide if this option is right for you.

 

Paying down debt is a worthwhile endeavor if you plan to buy a home. When you're able to purchase the home of your dreams with a mortgage you can afford, you'll know your hard work paid off.

 

Tom Stachler is a state of Michigan Licensed Broker working in and around the Saline, Ann Arbor, Dexter, Ypsilanti, Milan, Brighton and surround communities.  Stop by his website for more information and resources at www.TheRealtyTour.com

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What is Mortgage Forebearance

Friday, April 24, 2020
by Tom Stachler,ABR,CDPE - Group One Realty Team

Forbearance Facts that could save you from trouble later...

3 things to consider about forbearance, before you take action:

- A forbearance agreement is actually a form of loan default, based on a temporary hardship that allows you to make a reduced payment (or no payment at all) during the terms of the forbearance. 

Although according to the CARES Act a servicer may not require proof of hardship, this program is not designed for you to take if you are able to make your payments.

- While the forbearance won't affect your credit score, it will still be on your credit profile. This means it could be the reason you are denied a mortgage in the future, whether a purchase or a refinance of your current mortgage. It could even stop you from selling your Home in the next 6-12 months because you may not be able to get financing for a new home.

- Your payments are not just tacked on to the end. While this is a possible scenario, this deferment is not the usual process. Instead, it is more likely your missed payments will be due at the end of the forbearance period, in either a lump sum or possibly spread out over a longer timeframe (such as a year). So if you're able to make your payment now, you won't have saved anything - you'll just have a larger payment to make in a few months and have affected your ability to obtain a future mortgage in the process.

If you'd like to know more about your options, please contact me anytime and we can talk about it. I can put you in touch with a mortgage professional who can help.

 

Tom Stachler is a licensed Realtor Broker and Builder selling homes in the Ann Arbor, Saline, Dexter, Chelsea, Ypsilanti, Milan and surrounding areas. Use the helpful Links on this page for house and condo information, vacant property listings and much more in Michigan.  

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Should I still buy a home during the COVID-19 crisis?

Friday, April 10, 2020
by Tom Stachler,ABR,CDPE - Group One Realty Team
Should I still buy a Home during the COVID-19 crisis?
 
Answer: YES! And here's why now is a great time...
 
We've been in a "seller's market" for a few years now, meaning that there has been more demand from buyers than home inventory for sale. This means that many homes have had bidding wars, with multiple offers driving up prices and leaving many potential buyers with no home at all.
 
But that's not the case right now. Inventory is tight
 
So why not wait? One reason is mortgage interest rates are currently GREAT and hovering around 3%. Won't home prices come down because of the virus crisis? The answer here is, "No, not likely." Many potential sellers will choose not to list their home during this time, especially if home prices drop at all. With the mandatory "stay at home" in place, many can't properly list their homes with photos and meetings with their realtor. That means inventory will remain tight, with less homes to choose from and more demand.
 
Besides, even if home prices do come down some, they will rebound after the Lock-down, driven by buyers wanting to take advantage of these historically low rates before they go up as the economy picks back up and recovers. Rates will be lowest now and in also the first 30 days post lock-down because with the spring/summer scramble mortgage rates are likely to rise at the same time. So Buying a home now, with rates as low as we are seeing, makes homes more affordable.
 
If you'd like to discuss it more, or maybe find out more about home inventory and affordability in our area, reach out anytime. I'd be glad to talk about it with you, and there's never a charge or obligation.
 
Check out the Links, listings and resources on this website and let us hear from you.  We would love hearing from you and enjoy helping everyone.  
 
Tom Stachler is a state licensed real estate broker and builder with over 30 years experience.  Let him or a team member assist you today in the Dexter, Ann Arbor, Saline, Ypsilanti and other surrounding communities.  
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Fannie Mae Assistance Options for Homeowners Impacted by COVID-19

Wednesday, April 1, 2020
by Tom Stachler,ABR,CDPE - Group One Realty Team

Fannie Mae Assistance Options for Homeowners Impacted by COVID-19

WASHINGTON, DC – Fannie Mae (FNMA/OTCQB) wants to help ensure families are given options in these uncertain times in the case of job loss, a reduction in work hours, illness, or other issues. We want to remind those impacted by COVID-19 of available mortgage assistance and relief options. Under Fannie Mae's guidelines for single-family mortgages:

  • Homeowners who are adversely impacted by this national emergency may request mortgage assistance by contacting their mortgage servicer
  • Foreclosure sales and evictions of borrowers are suspended for 60 days
  • Homeowners impacted by this national emergency are eligible for a forbearance plan to reduce or suspend their mortgage payments for up to 12 months
  • Credit bureau reporting of past due payments of borrowers in a forbearance plan as a result of hardships attributable to this national emergency is suspended
  • Homeowners in a forbearance plan will not incur late fees
  • After forbearance, a servicer must work with the borrower on a permanent plan to help maintain or reduce monthly payment amounts as necessary, including a loan modification

Fannie Mae also offers help navigating the broader financial effects of this national emergency to homeowners with a Fannie Mae-owned mortgage through its Disaster Response Network*, including:

  • A needs assessment and personalized recovery plan
  • Help requesting financial relief from insurance, servicers, and other sources
  • Web resources and ongoing guidance from experienced disaster relief advisors 

Homeowners can find out if they have a Fannie Mae-owned mortgage and access to the Disaster Response Network™* by visiting www.KnowYourOptions.com/loanlookup.

"Our thoughts are with everyone who may be impacted by COVID-19 and we urge you to stay safe and well during these unprecedented times. Fannie Mae, along with our lending and servicing partners, is committed to ensuring assistance is available to homeowners in need. We encourage residents whose employment or income are impacted by COVID-19 to seek available assistance as soon as possible," said Malloy Evans, Senior Vice President and Single-Family Chief Credit Officer, Fannie Mae.

Homeowners can reach out to Fannie Mae directly by calling 1-800-2FANNIE (1-800-232-6643). For more information, please visit www.knowyouroptions.com/covid19assistance.

About Fannie Mae
Fannie Mae helps make the 30-year fixed-rate mortgage and affordable rental housing possible for millions of Americans. We partner with lenders to create housing opportunities for families across the country. We are driving positive changes in housing finance to make the Home Buying process easier, while reducing costs and risk. To learn more, visit:
fanniemae.com | Twitter | Facebook | LinkedIn | Instagram | YouTube | Blog

Tom Stachler is a licensed realty broker and retired builder working in the Ann Arbor, Saline, Dexter,Ypsilanti, Milan and surrounding Michigan communities.  Check out the Links herein for more topics and information

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Decisions You’ll Have to Make When Buying Your First Investment Property

Saturday, October 12, 2019
by Tom Stachler,ABR,CDPE - Group One Realty Team

Tom has been an income property manager and marketing specialist for nearly 30 years.  We have spread sheets and other helpful tools for our client buyers or sellers.  Contact us today for more information if you are looking to invest. 

3 Decisions You’ll Have to Make When Buying Your First Investment Property

Whether you’re angling for financial independence or looking to supplement your family’s income, buying a rental property is a smart investment. Not only do real estate investments create passive income, but they also generate long-term appreciation. But before you start shopping for your first investment property, there are a few key questions you need to answer.

Will you buy a short-term or long-term rental?

An increasing number of real estate investors are opting for vacation Rentals rather than traditional long-term rental properties. Should you?

 

It’s true that vacation rentals have higher profit margins than traditional rentals. However, they’re also more work to manage due to frequent tenant turnover.

 

Vacation rentals aren’t suitable everywhere, either. Unless your area attracts enough tourism to keep vacancy rates down, a long-term rental is likely a safer bet. Many places also have restrictive rules on short-term rentals, with some cities banning rentals under 30 days entirely.

 

If you are buying in an area with year-round tourism and laws friendly to vacation rentals, buying a vacation rental could deliver a much greater return on investment than a traditional rental. However, you’ll need to factor taxes, property management fees, and other expenses into the ROI calculations.

How will you manage the property?

Speaking of property management fees: While some investors opt to self-manage their property, most serious investors prefer outsourcing to property management agencies. That’s because managing rental properties can be a full-time job in and of itself, but if you’re a first-time investor, you likely have other responsibilities competing for your time.

 

Trying to juggle it all yourself is a recipe for lackluster marketing, lapsed maintenance, and disgruntled tenants. While you might not feel the effects immediately, over time this has a big impact on your property’s profitability. A professional property manager is better equipped to keep your property in good condition and your guests or tenants happy. Unless you like the idea of fielding late-night emergency calls, look for an agency that offers a 24/7 support line to both you and your tenants or guests.

 

Be prepared to part with some of your rental revenue in exchange for top-tier property management. However, a good property manager saves money in other ways. Not only do they successfully market your property and ensure regular use, professional property managers also give you reduced rates for maintenance and repairs, either through in-house staff or volume discounts with outside contractors. Plus, with all the time you’ll save, you can find your next rental property and grow your income even further.

How will you pay for it?

For most first-time investors, the most confusing question isn’t how to manage the property; it’s how to pay for it. Lending requirements are stricter for investment properties than owner-occupied ones, with most lenders requiring higher credit scores and debt-to-income ratios for investment purchases.

 

The good news is you can use projected rental income to qualify for an investment property mortgage. However, you’ll need to complete a rental appraisal, known as a Comparable Rent Schedule, and only 75% of the projected income will be factored into your DTI ratio.

 

Investment properties also require larger down payments — usually at least 20%. It’s possible to borrow money for the down payment, although any new debts will be factored into the DTI ratio. Borrowing against a primary residence’s equity, either through a Home equity loan or home equity line of credit, is a popular way to fund the down payment. 401(k) loans and Roth IRA withdrawals may also be used for a down payment, but investors should discuss these options with their financial planner or accountant before making a decision.

 

With low risk and high-profit potential, rental properties are an easy entrance into real estate investing. However, buying an investment property isn’t the same as buying a home of your own. Instead of shopping according to what you like, you need to buy based on what sells. If you want guidance in choosing the right rental property for your portfolio, reach out to a real estate team that knows the local area by heart.

Tom Stachler is a licensed Broker and Builder, a member of the Ann Arbor Area Board of Realtors and CPIX Commercial Board of Brokers and has been assisting families buy and sell real estate in the Ann Arbor, Saline, Dexter and surrounding communities for over 30 years.  Contact us or use the helpful Links on this website for realty related resources and new property listings for sale and Lease, homes, condos, income property and commercial real estate are all covered by our office.  

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$1,000 Lender Credit Could Be Yours

Wednesday, March 6, 2019
by Tom Stachler,ABR,CDPE - Group One Realty Team

You qualify for this $1,000 lender credit as a buyer or seller. See the details below in the flyer and call us for your Home Buying needs. 

 

Tom Stachler is a licensed broker serving the Ann Arbor, Chelsea, Saline and Dexter Real Estate Michigan Markets.  Please refer to the helpful Links above for more information about Buying or selling real estate, homes and condos when searching for one of the area's best real estate brokers. 

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Buying a Home? Factor These Into Your Interest Rate Calculations

Wednesday, October 25, 2017
by Tom Stachler,ABR,CDPE - Group One Realty Team

Buying a Home? Factor These Into Your Interest Rate Calculations

The mortgage process can be complicated if you jump in without any prior knowledge on home-buying and lending. The best tool you can arm yourself with is an understanding of how your mortgage interest rate is calculated.

Credit can make or break you. 

Your credit score will determine how reliable you are in the lending world. The higher your score, the lower your interest rate will likely be. Check your credit on one of the three major credit reporting agency sites—TransUnion, Experian and Equifax—or your credit card company may have a free credit report service (although these aren't as reliable). Improve your FICO score for a better chance at a lower interest rate.

Factor in size and location.

  • State or County: Even your place of residence can affect your rate.
  • Local Mortgage Lenders: Shop around. Interest rates can vary from company to company even if they're located in the same town.
  • Loan Size: The size of your home can also impact your interest rate. The bigger the loan, the higher your interest rate will be if you're not putting more money down.
  • Down Payment Size: Your mortgage interest rate may also depend on how much you're putting down and if your loan includes closing costs and private mortgage insurance (PMI). Putting down less than 20 percent can increase your risk factor and may require PMI, but your interest rate may be lower depending on the loan.

Not all loans are created equal.

Loan Length: Your loan terms play a bigger role in interest rate calculations than you think. Have you decided whether you want to pay off your loan in 15 or 30 years? You may pay more per month with a shorter term, but you'll be paying less interest over the life of your loan. Short-term loans may also have a smaller interest rate.

Fixed or Adjustable: You'll also have to consider whether a fixed- or adjustable-rate loan is right for you. Your interest rate can change over time if you choose an adjustable-rate loan. It may start off low or fixed, but can increase over time depending on market conditions. Fixed-rate loans, however, will have a higher interest rate attached to them.

Loan Type: Interest rates can also vary according to your loan type. Choosing a loan can be overwhelming, but a local lender should be able to provide you with the best options. Some of the more popular loans are conventional, FHA and VA loans. While FHA loans have less down payment restrictions and a smaller interest rate, your monthly payment can be more expensive due to the required PMI added on. VA loans can have smaller interest rates and don't require PMI like FHA does. Conventional loans are widely accepted in the real estate industry as dependable, but your interest rate may be higher.

Tom Stachler is a Michigan licensed real estate Broker and Builder working in the Ann Arbor, Saline and Dexter Real Estate markets.  Please refer to the helpful Links above for more information about Buying or selling real estate, homes and condos when searching for one of the area's best real estate brokers. 

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Mortgage Rates: How Low Will They Go?

Saturday, July 1, 2017
by Tom Stachler,ABR,CDPE - Group One Realty Team

Mortgage Rates: How Low Will They Go?

 

Mortgage Rates: How Low Will They Go?

How low will they go? Mortgage rates limboed down again this week, with the 30-year, fixed rate—3.88 percent—marking a new low for 2017, according to Freddie Mac’s recently released Primary Mortgage Market Survey® (PMMS®). Both the 15-year, fixed rate and the 5-year, Treasury-indexed hybrid adjustable rate moved down to 3.17 percent.

“The 30-year mortgage rate fell two basis points to 3.88 percent this week,” says Sean Becketti, chief economist at Freddie Mac. “However, the majority of our survey was conducted prior to Tuesday’s sell-off in the bond market which drove Treasury yields higher. Mortgage rates may increase in next week’s survey if Treasury yields continue to rise.”

Tom Stachler is one of the Ann Arbor and Saline Michigan's leading real estate brokers with over 25 years of experience in the Ann Arbor and surrounding areas.  Check out the MLS Listings link above for a list of thousands of real estate listings for sale in Michigan.

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30 Year Mortgage Rate Dips Down for Third Straigh Week

Friday, April 7, 2017
by Tom Stachler,ABR,CDPE - Group One Realty Team

30-Year Mortgage Rate Dips Down for Third Straight Week

 

30-Year Mortgage Rate Dips Down for Third Straight WeekMortgage rates keep treading down, with the average 30-year fixed mortgage rate dipping for the third week in a row toward the lowest it has been this year, according to Freddie Mac’s recently released Primary Mortgage Market Survey® (PMMS®).

The 30-year fixed mortgage rate this week averaged 4.10 percent, while the 15-year fixed mortgage rate averaged 3.36 percent. The 5-year Treasury-indexed hybrid adjustable mortgage rate averaged 3.19 percent.

“The 10-year Treasury yield was relatively unchanged this week, while the 30-year mortgage rate fell four basis points to 4.1 percent,” said Sean Becketti, chief economist at Freddie Mac, in a statement on the survey. “After three straight weeks of declines, the 30-year mortgage rate is now barely above the 2017 low. Next week’s survey rate may be determined by Friday’s employment report and whether or not it can sustain the strength from earlier this year.”

Look for the lowest rates using Ann Arbor's best lenders by visiting www.LendAnnArbor.com for a list of the area's best mortgage brokers.  The lenders are from many different companies and all have at least 15 years of experience and are either a vice president or branch manager.  

 

Tom Stachler is one of Saline Michigan's leading real estate brokers and buyers agents with over 25 years of experience in the Ann Arbor and surrounding areas.  Check out the MLS Listings link above for a list of thousands of real estate listings for sale in Michigan.  

 

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