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I don’t usually push my home and condo search site, but with the Home Buyer Tax Credit coming to a close, (80 days) I wanted to give you the links to search for homes. The credit expires on June 20th. You must be under contract by April 30th.

Here is a chart of how a loan progresses in Ann Arbor with the new Good Faith Estimates and new HUD Guidelines.

Courtesy of Tom Richardson of Liberty Title.

Here is a look at the new Good Faith Estimate if you are buying or going to be buying a home in the Ann Arbor Area.

This is the first change to the form in 17 years. The whole idea of a new form was to make the lending process more transparent to the consumers.  It encourages you to shop for a loan and make comparisons.

One of the biggest complaints was buyers getting to the settlement table and fees being different than what was expected to the consumer.

In the current form all the fees are grouped together by category, the form is standard to everyone buying in the U.S, and their is little room for fees being changed at closing.

The only 3 things that can be changed after you have applied for a loan is:

1) The cost of where you got your title insurance, the attorney fees, deposit into your escrow account (for taxes, insurance), the daily interest changes.

Once your lender gives you your good faith estimate, the origination fee can not change, the interest rate.

At the closing or settlement table you will be asked to compare and fill in the numbers on the HUD and the GFE so that they match up.

A few items can be change within 10% of the quote.

• The required services that the lender quoted.

• The Title Services if the lender chose them

• Owners title policy

• Government recording fees.

Tomorrow we will talk about “Special Circumstances” that would allow changes on the GFE. I know this is confusing, we went from a 0ne page GFE to a 3 page GFE.  But, the intent was to give better numbers to you the buyers.

You can download the book on the HUD.gov web site called Shopping for Home Loans, HUD’s Settlement Cost.

Getting a home loan in Ann Arbor. Today I attended a Continuing Education Class taught by Tom Richardson, General Counsel of Liberty Title Company.

The next several posts I am going to go through the steps as everyone who is buying a home in Ann Arbor Area is being affected by the new Good Faith Estimates and Housing and Urban Development Forms.

All the new rules came into effect on January 1st. The three things I want you to remember as we start the series are:

• The lender is required to provide you a GFE (Good Faith Estimate) within 3 days of applying for the loan.
• Certain fees can not change at all. A few can change up to 10%, and 3 can change at closing. More details coming.
• The purpose of the new act is to help you the buyer know the true cost of purchasing a home. You are encouraged to shop and compare.

Here is a little graph I created to show you the 12 steps to obtaining a loan in the Ann Arbor Area.

You can download the entire guidelines at HUD.gov and download the Shopping for Home Loans, HUD’s  Settlement Cost Booklet.

Ann Arbor and all of Washtenaw County residents, FHA has made changes to their lending criteria.

• Sellers will now only be allowed to ask for 3% in seller concessions. This is important as many home buyers need 6% on their homes. In Michigan where many times the sellers have moved the home as gone back to non-homestead taxes, so this could potentially slow down the amount of buyers entering the market. HUD (Housing and Urban Development)has not determined when this will go into effect.

• Condo’s will no longer be allowed to be spot checked. This means the entire project must be approved to get a loan there. This will greatly affect us in Ann Arbor as we have many condo communities so the buyers will need to get a conventional loan. In order to get a spot check you must be under contract on or before February 1st. With a case number. Ask your lender to assign a case number to your file RIGHT AWAY.
• Many of our subdivisions in Washtenaw County are called Site Condo’s. They will now be treated the same as residential homes, which they were, but FHA required proof. This will no longer be necessary.
• Private Mortgage Insurance (PMI) is required on all FHA loans when you put down the current 3.5% as a down-payment or less than 20%. It is currently at a rate of 1.75% increasing to 2.25% on all loans assigned after April 5th, 2010. If you are moving to Ann Arbor Area, get under contract before April 5th with an assigned case number to save on your mortgage insurance.
• Credit scores will be raised from the 580 credit score to 620 to 640 if you put down under 10% of the purchase price.  This date has been established either. I don’t see this as being a huge deal as many lenders are already requiring it.

If you are a Resident relocating to University of Michigan for medical school, be mindful of these dates if you intend to finance your condo with FHA.

Title Insurance in Ann Arbor

When you buy or sell a home in Ann Arbor, you need title insurance. The seller buys 1/2 of the title insurance based on the sale price of the house. The buyer purchases title insurance on the mortgage amount.

Friday I attended seminar sponsored by the new Washtenaw Councel of Realtors, formally Womans Council of Realtors.

The panel was composed of Scott Broucher of Absolute Title, Debbie Ellison of American Title and Gary Selesko  of Cislo Title.

They opened  by saying this seminar is going to be Title Insurance 101, I thought “oh great, I got up early for this.”

However the panel did not disappoint.

Short Sales and Foreclosures

One thing I learned for people buying a short sale or foreclosure in Ann Arbor is to make sure you obtain your own title policy and NOT TO DEPEND on the BANK to give it to you or for it to be clean title work.

One of the local Ann Arbor Realtors who sold 187 foreclosed properties last year said she could not believe the number of “supposed buyer agents” NOT asking for or ordering Title Work on a foreclosed home.  Weeks later they would call her and ask for the title work. The bank provided NONE.

Just because you close at a title company doesn’t mean they insured over that. Even if they did you some kind of policy it could be so vague as to give you no protection at all.

Example

Case in point, my daughter a buyer agent on the Missy Caulk TEAM was selling a foreclosed property in a new construction community in Belleville. She kept asking the listing agent for it, he kept saying he would get it but it never arrived. So she ordered it herself from a local Ann Arbor Title Company.

You should have seen the liens from taxes, home owner association, contractors and utilities.

It took us 9 months to close this home because all the liens had to be waived or payed to get a clean title policy. Now what if she had waited or not ordered it for her own buyer? What if you were that buyer and tried to sell in a few years and found out all those liens had not been taken care of when you purchased?

Attorney Review

If you are buying a home in Ann Arbor Area, especially if it is a short sale or foreclosure, INSIST your agent get your title work from a local company with enough time to review and have an attorney review.

On short sales or foreclosures I insist my team ALWAYS have the buyers pay for attorney review. If you are buying a distressed home, you are getting that home most likely under market value. That is a good thing.  So spend the extra $250.00 for an attorney to review. It will be money well spent.

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