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This is a special year for Ann Arbor Mortgage Company - our 15th anniversary. We could not have achieved this milestone without the support of our Realtor referral partners, our supportive business partners, our many loyal customers and our dedicated employees.
We have grown from a one person office to a company with several locations and eight employees in the past 15 years. We have closed over 4,500 loans worth over $685 million in volume and are fortunate to have many repeat borrowers.
The mortgage industry has gone through some radical changes in the past few years. The 160 years of combined experience from our staff have enabled us to adapt to the many changes that occurred and remain in the forefront in the lending community. Our primary focus has never changed: to provide the best possible mortgage products, the most competitive rates and the best customer service to enable borrowers to make financially sound buying decisions.
Thanks to all who have made the past 15 years so enjoyable. We look forward to the next 15 years!
Bill Holmes
President |
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Rural Development Loan Update
Breaking News!
With your assistance Michigan just became the first state to eclipse the $4 BILLION mark for GRH (Rural Development) loans closed. Thanks for all of your continued assistance. |
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Rent Credit for Option to Buy Transactions
In today's economy a number of buyers and sellers are executing leases with the option to buy. There are a number of things both parties should be aware of.
Rent credit for option to buy is an acceptable source of funds toward the down payment or minimum borrower contribution. Borrowers are not required to make a minimum borrower contribution from their own funds in order for the rental payments to be credited toward the down payment.
Credit for the down payment is determined by calculating the difference between the market rent and the actual rent paid for the last 12 months. The market rent is determined by the appraiser in the appraisal of the subject property.
The lender will require the following documentation:
- A copy of the rental/purchase agreement evidencing a minimum original term of at least 12 months, clearly stating the monthly rental amount and specifying the terms of the lease.
- Copies of the borrower's cancelled checks or money order receipts for the last 12 months evidencing the rental payments.
- Market rent as determined by the subject property appraisal.
Make sure that you follow these guidelines when entering into the agreement so that when the time comes to exercise the option that all monies can be accounted for.
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Credit Corner
Source: MyFico.com and Bankrate.com
In this issue we will explore amounts owed and length of credit history.
45% of your credit history is made up of the amounts owed and the length of time that your credit has been established. Listed below are all of the factors that influence the score.
Amounts Owed
Amount owing on accounts
Amount owing on specific types of accounts
Lack of a specific type of balance, in some cases
Number of accounts with balances
Proportion of credit lines used (proportion of balances to total credit limits on certain types of revolving accounts)
Proportion of installment loan amounts still owing (proportion of balance to original loan amount on certain types of installment loans)
Length of Credit History
Time since accounts opened
Time since accounts opened, by specific type of account
Time since account activity
In our next issue we will explore the last two categories that influence your credit scores: new credit and the types of credit used.
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Dropping Off the FHA Approved Condo List
An estimated 2,200 condominium projects nationwide last week lost their eligibility for Federal Housing Administration-guaranteed sales and refinancing. Unless condo officials take action, another 23,000 residential condos with housing units numbering in the tens of thousands will lose their eligibility by spring. That means that buyers of units in these buildings won't be eligible for FHA financing.
In our marketplace, only four condos dropped off the list: Chapel Hill in Ann Arbor (we are working with them to get re-approved) and College Heights, College Park Terraces and Wingate Park in Ypsilanti.
This situation was the result of an effort by the FHA to guarantee that condos and their underlying home owners associations have adequate budgets, legal documents, and other things that lead to financial stability. In 2009, the FHA spelled out tough standards that required that condo projects approved for FHA financial before 2007 have their approvals renewed by Dec. 7, 2010. About 25,000 projects missed the cutoff. Because there were so many, the FHA extended the deadline, setting new deadlines throughout 2011. The only losers were the 2,200 projects that had the oldest approvals. We urge all condominium owners to get in touch with their associations and push them to meet the revised deadlines.
Ann Arbor Mortgage is happy to assist with the FHA approval process for any condo complex. |
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Is an FHA or a Conventional Mortgage a Better Deal for a Buyer?
Every deal and client is different. Therefore, you will not have the same answer for every situation. That is the key to being a great advisor, being able to assess each situation for each client. For example, if someone is putting 20% down, conventional will have a great advantage over FHA because there is no insurance required for an 80% LTV conventional loan, but there is insurance required for an 80% FHA loan. When someone needs to make a minimum down payment, FHA has only a 3.5% requirement that may be gifted from a family member. Conventional loans typically require a 5% down payment requirement which must come from the borrower's own pocket. FHA does not charge a higher insurance premium for lower credit scores as is the case with conventional financing. FHA currently allows 6.0% seller contributions regardless of loan-to-value while a conventional 5% down transaction is limited to a maximum of 3% seller contribution. One huge benefit of an FHA loan is that the loan is assumable at the same rate. If rates go to 8.0% tomorrow and someone has an assumable loan at 4.5%, the home will be much easier to sell. Therefore, it is like an insurance policy which can help you sell in bad times. Please keep in mind that those who assume FHA loans must qualify and be an owner-occupant. |
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Ann Arbor Mortgage Company
2200 Green Road, Suite E
Ann Arbor, MI 48105
734.669.5880
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Mortgage Rate Update
One of the wealthiest and most highly successful investors on the planet is "locking" in now. You may have heard of him - he goes by the name of Warren Buffet. He just sold $1.5B in fixed debt of his Berkshire Hathaway Company in order to refinance their adjustable rate loans. If he thinks it is a good time to lock, others might be wise to follow.
A lot of economic stimulus has been hitting the economy lately and there is a sense that economic growth may pick up more than previously thought. This growth, over time, will lead to gradually higher rates as the year progresses. Looking ahead, this recovery will be a slow one with many stops and starts. This type of recovery will extend the pain for many. The good news? It is more likely to be a longer, more sustainable recovery in the long-run. So while tiny steps may not seem like much, we believe when we look back two years from now, the progress will be significant. Here is looking for a better 2011 than 2010, which was much better than 2008 and 2009. |
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Freddie Mac Says...
Source: Freddie Mac
Freddie Mac analysts point to five features that they believe will likely characterize the 2011 housing and real estate markets:
- Advantageous home loan rates. With Fed observers expecting the central bank to keep the federal funds rate at its current target range of 0 percent to 0.25 percent for most (or all) of 2011, relatively advantageous rates will be a feature of the 2011 market. Thirty-year fixed-rate loans are likely to remain below 5 percent throughout the year, and initial rates of 5/1 hybrid adjustable-rate loans will likely remain below 4 percent in 2011.
- Prices have hit bottom. House prices are likely to begin a gradual, but sustained recovery in the second half of 2011.
- Housing will remain affordable. With affordability high, many first-time buyers will be attracted to the housing market in the New Year, likely translating into more home sales in 2011 than in 2010.
- Refinances will dwindle. Many eligible borrowers have already refinanced and the federal Making Home Affordable refinance program is expiring on June 30. While fixed-rate loans are likely to remain low, they will move up gradually, making it even less likely that refinances will be attractive to most home owners.
- Delinquency rates will decline. Based on the last several business cycles, the share of loans that are 90 or more days delinquent or in foreclosure proceedings - known as the "seriously delinquent rate" - generally crests within a year of the start of the recovery in payroll employment, and this economic recovery appears to fit within that pattern. Payrolls began to rise last January, and by the spring the seriously delinquent rate had begun to fall.
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PMI Tax Deductibility Extended Through 2011!
Great news for the New Year! The mortgage insurance tax-deductibility law has been extended
through 2011.
Eligible borrowers with adjusted gross incomes up to $100,000 may be able to deduct 100% of the MI premiums paid in 2011.
Deductions are phased out in 10% increments for borrowers with adjusted gross incomes between $100,000 and $109,000.
For more details, please contact yout CPA or tax advisor.
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Our goal is that each customer and client becomes a RAVING FAN, someone who is so pleased with the experience they have had with Ann Arbor Mortgage Company, that they naturally and enthusiastically refer family, friends, and associates to us anytime the topic of home financing arises.
Mary Adams really demonstrated excellent customer service during our home loan refinance process. She called us often to keep us updated on our loan. She took time out every time we called with a question and returned all of our phone calls promptly. Mary Adams is very knowledgeable and was able to explain the process and all of the information in a way that anyone can understand and feel comfortable. I highly recommend Mary Adams of Ann Arbor Mortgage Company
to anyone who needs a loan!
Mr. and Mrs. Watson
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Dear Mike, Thank you for all of your time and effort to make this all possible. We really appreciate all that you have done! Matthew and Deidra |
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