Appraisal Guidelines for 2019 for FHA, Rural Development and Conventional Home mortgage loans.

mortgage loans

When you are applying for a loan to purchase a home the lender will require you to pay for a home appraisal, with current Government guidelines you can’t choose your particular appraiser, this Is done in a pool of appraisers and the lender or you can’t know in advance who it might be; this protects the buyer so he/she knows the appraisal was done with a third party and no influence from any parties had anything to do with the value of the property.

A State of Michigan licensed appraiser is an expert that has taken up to 80 hours of courses to obtain and over 2,500 hours of supervised inspections with a licensed appraiser to get fully licensed, as a home buyer you are making a small investment with the appraisal process to ensure that the home you are buying is worth what you are paying.

All appraisers have the ability to use their own judgment while doing an appraisal regardless of it is a Conventional home loan or a FHA, Rural Development or a VA loan.

With Conventional Home Loans through Fannie Mae and Freddie Mac most appraisers are only concerned with the market value of the property in question; meaning when an appraiser goes to a property that is a Conventional loan they are only concerned with the condition of the property as it relates to the value.  But if the appraiser deems safety deficiencies on the property they can require repairs to be made before he or she will sign off.

With FHA home mortgage loans HUD or (Housing and Urban Development) authority requires appraisers to not only determine the current market value but they also require the appraiser to inspect the property to make sure the home meets HUD’s minimum standards for health and safety. The primary difference between Conventional loans and the FHA 3.5% down home loan or the Rural Development 0% down is that the appraiser  can and many times will call out deficiencies on Conventional loans at their discretion; but with FHA and RD ( Rural Development) loans there is a more concise list that you can refer to.

Overview on Appraisal Guidelines:

At a minimum, the appraiser must complete the following steps:

  • Visually inspect the subject property both inside and out, and take pictures.
  • Visually inspect the property to be included with the loan, must show any out barns, detached garages or improvements; including pools or patios.
  • Inspect crawl spaces or basement and inspect all mechanicals, if there are any health or safety issues, these must be notated on the appraisal and corrected by the buyer or seller.
  • If mechanicals that are integral to the homes safety or salability and or livability are found to be not operating correctly then the seller must correct those issues. If there are safety components on any issues on any of the mechanicals like a home heating/cooling unit that are not properly installed this can also be an issue that the home appraiser can write up as a deficiently that needs to be addressed before the loan can be funded.
  • If the home you are buying or selling is on a well for water you may be asked to have a professional company test that water to ensure it is safe for drinking, which if it is not would constitute a health hazard, especially if the home you are buying or selling is close to a farm that uses chemicals for crops or a dairy farm that has large amounts of sewage from animals.
  • Health and safety issues can encompass a large amount of topics but the most common issues fall in the following points depending on what financing you are applying for.
  • Regarding health and safety the appraiser will look at if there is adequate hand railing going up to second story levels of the home as well as going down to the basement and also entrance ways into the home.  The appraiser will also make sure there are covers on the home’s breaker panel and possibly GFCI outlets installed when they are near a water source, once again this is a case by case situation that the appraiser can call out as a deficiently if they determine it is a health or safety concern.
  • If the home you are buying or selling was built before the year 1978 then lead based paint can also be an issue if the paint is peeling on the inside of the home or the exterior, in this case the peeling paint will need to be scraped and removed from the property and painted over the removed peeling paint to ensure the surface is protected from the elements and possible rotting of the wood.
  • If the home appraiser visually sees any type of possible mold in the home then they might require a third party to determine if this is also a health hazard, also signs of water damage in the basement might constitute a home appraiser to ask further third party verification that this will not be an issue in the future.
  • Other things to consider when selling your home or buying a home regarding what a home appraiser may call out is having up to code coverings on all electric outlets in your home and making sure there are no bare wires exposed regardless if they are old telephone lines or outlets that are not being used.  Windows that are not able to be opened because they are painted shut can be deemed a safety issue as well as cracked/broken exterior windows for example.  Recently I have had appraisers call out improper drainage on a property because the grade of the property allowed water to pool at the base of the basement, so this is not a topic that really has clear cut rules.

If you are buying or selling a home then I would suggest that you first contact me, Matt Keway at Icon Mortgage 810-223-2122; I will help you with the initial loan approval but also give you my extensive knowledge regarding possible appraisal/inspection problems that you might run into regardless if you are buying or selling.  Also after getting approved for your home purchase and/or sale you can talk to a full time professional realtor; who can work with me and also give you advice on any issues that they may see to make your transaction easier.

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VA Home Loan 0% Down Home Mortgage Loans

Icon Mortgage is veteran owned

The Matt Keway team at Icon Mortgage is pleased to offer no money down VA home loan solutions to qualifying active duty servicemen and women, U.S. military veterans, and surviving spouses. VA mortgages can be used to purchase real estate with no money out of pocket and as a refinancing solution with low closing costs and the potential to cash out some of the equity in one’s home. VA loans are guaranteed by the US Department of Veterans Affairs which allows lenders, such as Mid America Mortgage, the ability to offer VA financing at very competitive rates.

The Department of Veterans Affairs doesn’t issue the loans; banks, mortgage loan companies, and brokers do. The VA insures a portion of the loan in case of default. Lenders like that, so they follow the requirements issued by the VA to grant the loans. But lenders also can add some stipulations of their own. However Icon Mortgage only referrers to the VA guidelines so we have no over-lays which I define as rules on-top of rules.  This means that if you have been un-approved through your bank or credit union, you very likely will be approved through Icon Mortgage for your VA home loan because we strictly follow the guidelines and approve you to those standards.

Icon Mortgage is a US Army Veteran owned local Genesee County Company in Flint Michigan for over 15 years and we strive to service our local Veterans of the Army, Navy, Cost Guard, National Guard, Air Force, and Marine Corps. Thank you for your service and please call me; Matt Keway at 810-223-2122 for you loan approval. Your home loan consultation is always FREE and your credit report, on your request is also free, give me a call or email for your requests at 810-223-2122 or visit mattkeway@gmail.com.

 

VA (Veterans Affairs) Home Mortgage Loan requirements:

  • There is no down payment required. However, the sales price cannot be higher than the appraised value of home.
  • Not exclusive to first time home buyers.
  • There are no private mortgage insurance requirements with a VA home mortgage. Unlike FHA loans that require life of loan mortgage insurance.
  • Sellers may contribute towards closing costs in many cases, and can also in most cases pay for ALL of the Veterans closing costs.
  • There is no prepayment penalty for paying off a VA mortgage early; you can pay off your mortgage at any time with 0 pre-payment penalties.
  • VA home loans are assumable; this means when interest rates rise in the future you can market your home for a sale with your low-interest rate that you currently have and a potential buyer can assume that low rate which can be a huge selling point.

 

Here is a link to watch to learn if your military service makes you eligible for a VA home loan:

https://youtu.be/E1NO7ma8hDU

VA IRRRL loans allow borrowers with VA mortgages the ability to lower their interest rate without many of the costs and hurdles associated with other mortgage programs. There is no appraisal required with an IRRRL.

  • Borrowers may be able to roll any costs into their loan amounts or take on a higher rate in order for a lender to pay any associated loan expenses.
  • No cash-out is available from a VA Interest Rate Reduction Refinance Loan.

 

Certificate of Eligibility

After establishing that you are eligible, you will need a Certificate of Eligibility (COE). The COE verifies to the lender that you are eligible for a VA-backed loan. This page describes the evidence you submit to verify your eligibility for a VA home loan and how to submit the evidence and obtain a COE.

Before you make an offer, be sure to discuss with your real estate agent if having a VA Option Clause in your Purchase and Sales Agreement is a smart move. A VA Option Clause may enable you to void the contract without penalty if you are unable to qualify for VA financing.

 

VA Home Loan Appraisals

Once the buyer gets under contract on a home, a VA appraisal is conducted to assess the market value and condition of the property. The VA appraisal is a required step in the process and isn’t the same as home inspection, which is more thorough but not required. A home inspection is usually a good investment and can be done before the lender orders the independent appraisal.

The VA appraisal provides an estimate of the value of the property compared to the price of comparable homes. The appraiser will also check the property’s condition against the VA’s Minimum Property Requirements (MPRs). The VA wants to help ensure veterans buy homes that are safe and sound. Being familiar with MPRs will curtail frustrations if any red flags while you’re home shopping.

Properties that are valued below what you agree to pay present an issue. Generally, veterans can seek a Reconsideration of Value, make up the difference themselves or walk away from the purchase and look for another home. Some property condition issues will need to get fixed before the loan can close. Talk with a lender for more information.

 

Credit & DTI Ratio (Debt To Income)

The VA doesn’t require a specific credit score for veterans and military members who want to use this benefit. But VA lender typically will, and it’s often around a 620; however, your best option is to contact your local mortgage specialist Matt Keway at 810-223-2122 or www://mattkeway.com and work on getting your FICO score above 640 to make your home buying experience better. If you visit mattkeway.com or call me directly at 810-223-2122 I can consult you on how to raise your FICO score for free and we can work together to get you to the place you need to be to purchase your home.

 

Steps to Use the Benefit 

Eligibility – Determine if you are eligible for the VA Home Loan benefit based on service and discharge status; Icon Mortgage can help you with this just call Matt Keway @ 810-223-2122 or visit mattkeway.com for assistance.

Apply for a Certificate of Eligibility – A Certificate of Eligibility (COE) verifies that you are eligible for a VA-guaranteed loan; Icon Mortgage can this for you for free; we will take your information and send it to the VA and receive your VA Eligibility and discuss your options.  

In using your VA Home Loan benefit, you may be charged a 1% flat charge by the lender (sometimes referred to as a loan origination fee), and whatever reasonable and customary amounts for any or all of the following:

  • Appraisal and Compliance Inspections
  • Recording Fees –These are fees that you pay for recording your deed to the county and state.
  • Credit Report –Credit reports are free of charge at Icon Mortgage for pre-approval.
  • Prepaid Items
  • Hazard Insurance –This is Home owners insurance, just like auto insurance you must have an HOI or home owners insurance  policy in place once you purchase a home; typical home owners insurance policy’s range from $600-$1,200 per year depending on your home value, credit score, or if you have had any insurance claims in the past.
  • Flood Zone Determination
  • Survey (Not usually needed with Icon Mortgage)
  • Title Examination and Title Insurance
  • Special Mailing Fees for Re-financing Loans
  • VA Funding Fee- This fee is rolled into your VA loan and is not an up-front cost to you; the money helps keep the VA loan funded for other veterans.

In many instances you can negotiate with the seller to pay part of all closing costs; 4% of the purchase price is common but the veteran can have the seller pay for all of the closing costs in most cases up to 6% and higher. To limit your closing expenses, ask your real estate agent to submit your offer with the seller paying your closing costs. A local real estate agent that is an expert in VA home purchases that I recommend is Ed Constable from Tremaine Real Estate or use this great service that matches you with top agents in your market

Want a more basic understanding of VA loans? Click Here!

 

Why is your Credit Score is important to lenders?

Your Credit score is important when getting a loan from a lender to buy a house

Credit scoring is a important tool that provides lenders like Matt Keway from Icon Mortgage with a way of determining the level of risk they accept when loaning money to individuals. A higher credit score indicates that you manage debt responsibly, and increases your chances that a lender will say YES to your request to borrower money to buy a home. There are multiple factors in determining a credit score. Familiarizing yourself with these aspects will help you navigate the murky waters of credit score confusion.

Payment History when it comes to your credit score is important

• Do you pay your bills on time? If you do not then your credit history will reflect this and your score will be low. On time payments let lenders know that you take your obligations seriously. Payment history has the most significant effect on credit scores and is a key factor lenders consider in determining risk; if you have missed payments its water under the bridge and you just have to make on time payments for a while to get past that and your credit score will go up in time.

Existing Debt

• How much do you owe? If you have credit cards that are maxed out, this will impact your credit score negatively. Your credit score goes up and down monthly based on many factors but one of the biggest and most important factors in your credit score is the amount you owe on your revolving credit cards vs your credit limit; you may have a 700 FICO score today but if you make a large purchase on one of your credit cards then next month it could be several points lower until you pay the balance down; credit cards were not invented to live off they are meant to use in lieu of cash and pay off immediately however most people have huge balances which decreases their credit score. Lenders want to see that you have credit available, but that you have borrowed against it responsibly. Ideally, you want to have 25% or less of credit owed vs. credit available. To determine this, look at the credit limit for each account and compare it to what you owe. This is the second most impactful factor in determining a credit score.

Length of Credit History is important

• The longer credit history you have, the better lenders can see your borrowing & repayment habits. Life’s ups and downs can impact individuals’ finances and the way in which they utilize their existing credit lines. Demonstrating responsible history over time is the next most impactful factor in determining credit scores. YOU MUST HAVE RECENT CREDIT HISTORY, if you pay off all your credit cards, auto loans etc. and pay cash for everything then over time your credit score will fall dramatically! I have a lot of retired people that come to me and think their credit score is great but tell me they paid off everything and pay cash only and when I run the credit their score is 0 or a no score because the system has no data to go by; always have a credit card or two to keep your FICO score up you don’t have to use it though. Keep in mind with the credit score model you just have to have credit extended to you, the credit doesn’t need to be used; I would just use it once in a while to keep the card activate and pay it off before interest insures.

Mix of Credit Lines

  • Having different types of credit lines in your history can also enhance your scores, as it can demonstrate responsible history of credit utilization over a larger scale. However, this is a smaller factor in determining your overall credit scores and shouldn’t be a motivation to acquire additional debt just add to your mix of credit. Again don’t worry about this too much, if you have paid off your home and auto just keep a few credit cards open and you will be fine, you certainty don’t have to go get a RV loan or some other “term” loan to keep your score up.

New Credit & Inquiries

  • Recent multiple inquiries on a credit profile can create the impression that an individual is planning to acquire new debt. Don’t worry though while applying for a mortgage loan, when you apply for a mortgage loan and while shopping other lenders you’re only hit for one inquiry from the first time a mortgage lender runs our credit throughout the next 90 days; this encourages buyers to shop while not worrying about their score dropping. However DO NOT obtain any new credit after being approved for a mortgage loan as this could not only severely lower your credit score but may make you ineligible for the loan you were approved for because of DTI or debt to income.

No Matter what kind of loan you are trying to get weather it be a FHA loan, a conventional loan, a Rural Development, or Even VA loans your credit score is important.  I hope this was helpful. If you know anyone who could benefit from the information above please take to share the link with them. If you would like a introduction to a top realtor in Genesee County, Shiawassee County, or Livingston County you can all feel free to use Matt as a resource because if you can find a home for sale he can not do your loan.

Would you like to talk to top lender in the Flint and Surrounding area Matt Keway?

Call 7 days a week on his cell.   810-223-2122

Or submit your info below and he will be sure to contact you shortly.

If you just want to read more about the different types of loans click here

 

Student Loan Debt and Home Mortgages

Income-based Student Loan Mortgages Matt Keway

Student Loan Debt, Income-based repayment plans, and Home Mortgages Denied due to Student Loan Debt.

In the past if you were trying to get a home mortgage and you have college student loan debt home mortgage lenders were required to use the 1% rule; which means that if you have $50,000 in student loans they are required to count $500.00 per month against your debt to income regardless if you have an income-based repayment plan that is much less.  This 1% rule is used against you regardless if you have an income-based repayment plan which could be either $0 per month or much less than the 1%; therefore many people especially school teachers were typically denied for home loans due to the high debt to income limits. Fortunately, Fannie Mae, who is the largest purchaser or Conventional loans has updated the rules; see below copy and paste from Fannie Mae guidelines.

Here is the full link: https://www.fanniemae.com/content/announcement/sel1704.pdf

Fannie Mae guideline update April 25, 2017

Student Loan Payment Calculation We are simplifying the options available to calculate the monthly payment amount for student loans. The resulting policy will be easier for lenders to apply, and may result in a lower qualifying payment for borrowers with student loans. If a payment amount is provided on the credit report, that amount can be used for qualifying purposes. If the credit report does not identify a payment amount (or reflects $0), the lender can use either 1% of the outstanding student loan balance, or a calculated payment that will fully amortize the loan based on the documented loan repayment terms.  

What this means in layman’s terms is that what I mentioned before, if you have been declined for a home mortgage loan in the past because your debt to income was too high due to your projected student loan payment at 1% of the loan balance regardless to the income-based payment that is either $0 or very much lower than you can now use the lower payment and get approved!!  All you need to do is show proof of your income-based repayment plan and the lenders use that number/

Now FHA home loans, VA home loans, and Rural Development loans still require the lender to use the 1% rule, only Conventional Fannie Mae home loans follow the rule that what is reported on your credit report can be used.  The good news is that Conventional Fannie Mae guidelines have recently relaxed their down payment rules and only require 3 % down if you are a first time home buyer or have at least one person on the loan application that is a first time home buyer within the last 3 years. If you are not a first time home buyer you can also qualify for the 3% down if you are within the income limits for the Fannie Mae  Homepath program; here is the link to find out if you qualify https://www.homepath.com/state/mi.

Conventional loans have historically been thought of as 20% down loans; this is no longer the case.  You can get a Conventional loan at as little down payment as 3%, and the mortgage insurance is typically less than the go-to FHA loan which requires .85% mortgage insurance that by the way, you can currently never get rid of unless you refinance; Conventional loans allow you to drop the mortgage insurance when you have 20% equity in your home without refinancing!!  Home mortgage interest rates still are very comparable vs Conventional, FHA, VA, and Rural Development home loans but with Conventional home loans again you can get rid of PMI or mortgage insurance without refinancing vs other home loans, and again only 3% down if you qualify.

If you have been un-approved/denied for a home mortgage due to your college student loans give me a call, Matt Keway @ 810-223-2122 or visit www.mattkeway.com and I will give you a personalized consultation; no need to call an operator or front desk person this is my direct number.

Home Repair Escrows

home repair escrows

Home Repair Escrows

How do I buy a home that has repair issues or things that need to be repaired before I can get financing?

At Icon Mortgage and Matt Keway at mattkeway.com you can get approved for a home mortgage for a home that may have appraisal or inspection issues that cover roof damage, peeling paint, heating/cooling missing unit that will restrict you from getting a loan from banks and credit unions. Below I will educate you on home repair escrows and the ways you can purchase your home and finance or escrow the repairs AFTER you purchase the home.

Rural Development loans: This loan is a 100% financing product, here is the website link to check out if the property you are looking at is in the Rural Development map  https://eligibility.sc.egov.usda.gov/eligibility/welcomeAction.do here you can see the eligibility areas  and if there are repairs needed for the home you are considering purchasing or selling  than if your home is in this area then I can help with the loan and if there are repairs needed then we can structure  the loan to include the repairs as long as the property appraises above the value of the purchase price and we can include the improvements. If you want to sell your home AS IS then I can facilitate having the buyer make the improvements after closing or as a seller you can gift the money from cash from proceeds to take care of the improvements.

FHA, Conventional Home Mortgage Loans:

If you are purchasing a home with an FHA loan vs Conventional loan then you should contact me ASAP because there is no reason you should be getting an FHA loan which has PMI FOREVER, you can get a Conventional loan for as little down as 3% vs FHA which is 3.5% and has PMI of .85% for the life of the loan and can never go away unless you refinance, Conventional loans have a lower PMI and you can get rid of the PMI or mortgage insurance when you have20% equity.

Home Repair Escrows FHA, Conventional

If you are looking at purchasing or selling a home with Conventional or FHA financing and the home has issues like a bad roof or missing integral parts like a furnace or hot water heater then you can get your loan closed and finance the repairs after you close your loan.

To do home repair escrows you must first get a quote from a general contractor, this person must be licensed and hopefully insured but not necessary; we only require a business license.

The amount we hold in escrow is going to be 1 and a ½ of the quote so if your repairs are quoted out at $5,000 for example then we will need to hold $7,500 in escrow to be prepared for things that the contractor didn’t estimate upon the initial quote; after the loan is closed and you own your new home then the contractor comes out and does the work. The contractor then sends the invoice to me and I pay the contractor and any money left it sent back to you the home buyer.

If you have found your dream home but it needs a little work to make It financeable and banks and credit unions are not approving your property, give me a call at 810-223-2122 and I will help you.
 

Are Student Loans Preventing You From Obtaining a Loan?

Learn how I can get home buyers approved by utilizing student loan income-based repayment plans to get you approved with and with a lower interest.