In addition to the standard mortgage financing documents like, tax returns, W2’s/1099’s, pay stubs, and bank statements, the most common documents needed in a divorce lending situation include, but are certainly not limited to:

Executed copy of the final divorce settlement agreement, also know as the divorce decree. It must be signed by all parties, including the judge, and stamped by the court. The settlement agreement is needed to document any court ordered assignment of debt and/or any income like maintenance or child support.

Final order for support. This document is available from the Friend of the Court, and documents how much support is being paid/received. This document is updated whenever there is a change to the support order. If your support amount(s) have changed, the new order of support will be required.

Sometimes proof of age for the children for whom support is paid is needed, if it is not present with the final divorce settlement agreement, or on the order for support, to be able to document the support is satisfying the continuance requirement of 6 months receipt and 36 month continuance. A copy of their birth certificated may be requested.

This is just one piece in the puzzle that is divorce and your mortgage. Others will be covered in future posts in the series. If you have any questions about the documentation needed when applying for a mortgage post divorce, or if you are a family law attorney, in Michigan, and would like more information about how I can be of great value to your divorce team, please contact me. And if you have anything to add about the documentation needed, as it relates to divorce, please leave a comment.

The post Divorce Lending Series – Part Six – Documentation Needed appeared first on That Mortgage Banker Blog.

Tenancy By The Entirety  – Only a married couples may hold title in this manner, Provided they remain continuously married. The surviving spouse becomes the 100% owner of the property upon the death of their spouse.

Joint Tenants With Rights of Survivorship – Title must be held in equal interests, i.e. 50/50, 25/25/25/25. Title passes to the co-owners upon death of an owner. Any persons can be a co-owner.

Tenants in Common – Tenants in common are two or more owners, who may own equal or unequal percentages of the property as specified on the deed. Any co-owner may transfer his or her interest in the property to another individual. Upon a co-owner’s death, his or her interest in the property passes to the heirs or beneficiaries of that co-owner; the remaining co-owners retain their same percentage of ownership. Tenancy in Common is used when the co-owners want to leave their share of the property to someone other than the other co-tenants, or want to own the property in unequal shares.

If you are planning on keeping the home and leaving any current mortgage financing in place, please talk to your attorney, as a judgement og divorce can have a default effect on title.

Here is an example. if you current hold title as Tenancy By The Entirety, a divorce judgment will default the title vesting to Tenants in Common. Why is this bad? Because Tenants in Common do not have rights of survivorship, meaning your exe-spouse could transfer their interest in the home to their new spouse, or anyone else, for that matter.

Why is this a big deal? Let’s say you decide to keep the home and mortgage financing as is, post divorce, and sell the home at a later date. Your exe-spouse remarries, and then subsequently passes away in a horrific accident, if it makes your feel any better, but before they did, they had a premonition of their impending death, and transferred their ownership, in your home, to their new spouse. Now, you are on title with their new spouse and the new spouse will have to sign the purchase agreement, when you sell the home, and/or would have to acknowledge a refinance, if they refused to come off title.

This is just one piece in the puzzle that is divorce and your mortgage. Others will be covered in future posts in the series. If you have any questions about title vesting, or if you are a family law attorney, in Michigan, and would like more information about how I can be of great value to your divorce team, please contact me. And if you have anything to add about title vesting, as it relates to divorce, please leave a comment.

The post Divorce Lending Series – Part Five – Who’s on Title? appeared first on That Mortgage Banker Blog.

Contingent Liability

A jointly obligated debt in which the court orders one party responsible for payment. Most commonly the debt are the mortgage(s) on the marital home. For the party that is no longer obligated on the debt, via the court order, this debt is excluded from their debt to ratio, when seeking new mortgage financing.

So for instance, your spouse was awarded the marital home and the $1,200 a month debt that goes along with it. You apply for a new mortgage to purchase your new home. Even though the $1,200 a month mortgage appears on your credit report, since you are no longer obligated on it, per the court order, the $1,200 a month, nor the payment history from the date of the decree forward, applies to your eligibility for the new mortgage. This guideline applies to all conventional and government loans.

Equity Buy Out Refinance

This is a refinance transaction for the sole purpose of satisfying the equity buyout requirements which may appear in a divorce decree. For example, and this is a simple example, sometimes determining equity in a marital home can be much more complicated. So here we go, both parties agree that the marital home is valued at $200,000. There is a mortgage on the home with a balance of $120,000. Thus leaving $80,000 in equity, which must be split equally. In most instances the spouse who is awarded the home must refinance to extract the equity needed to settle with the departing spouse. There are a couple of lending guidelines to take into consideration. First, as long as the equity settlement is detailed in the divorce decree, the refinancing spouse will receive a lower interest rate and avoid the “cash-out” refinance which carries a higher interest rate and lower loan to value ratios. Second, all equity taken out, must go directly to the departing spouse, at closing. No amount of cash can go to the refinancing spouse, or else is the refinance becomes “cash-out” refinance and subject to the higher interest rate and lower loan to values. This guideline applies to all conventional and government loans.

Qualified Income & 6/36 Rule

There is a big difference between what is viewed as income and what counts as “qualified income”. In divorce situations there is often times the receipt of income like child support, spousal support, and maybe even a property settlement note. Each will constitute income, however each source must meet specific requirements to be considered as “qualified income” for mortgage financing.

In order to utilize spousal or child support as income for mortgage financing, each source must meet the 6/36 rule. You must be able to document receipt of the income, for the previous 6 consecutive months and, at the time of mortgage application, each source must have at least 36 more months remaining, or else it cannot be used as income for mortgage financing.

Remember 4th grade math? Here is a story problem for you, let’s assume the borrowing spouse has 2 children, ages 16 and 12.  They are receiving monthly support for their children in the amount of $600 for 2 children or $300 for one child, and each ends when the child reaches 18 years of age. They are also receiving spousal support in the amount of $1,500 monthly, to continue for 60 months. Both have been received for 7 months. How much income is qualified income for a mortgage? Answer, $1,800 per month. $1,500 in spousal support and $300 for one child. The support for the eldest child will not continue for the 36 month requirement. The spousal support and support for one child do continue for greater than 36 months, and have been received for greater than 6 months.

In the case of a property settlement note, that income too has to continue for 36 months, but you will need to document the previous 12 consecutive months of receipt, for it to be considered “qualified income” for mortgage financing.

This is just one piece in the puzzle that is divorce and your mortgage. Others will be covered in future posts in the series. If you have any questions about qualified mortgage income or if you are a family law attorney, in Michigan, and would like more information about how I can be of great value to your divorce team, please contact me. And if you have anything to add about the income, as it relates to divorce, please leave a comment.

The post Divorce Lending Series – Part Four – Mortgage Guidelines That Matter In Divorce appeared first on That Mortgage Banker Blog.

Tax Assessed Value

The tax assessed value is not usually the most accurate method to value real estate. Tax valuations tend to be low, by as much as 50%. If there is a dispute in value, the tax assessed value is likely to be given little weight in court.

Realtor

A real estate valuation can be preformed by a Realtor at little or no cost. However, such valuations are often less reliable than those preformed by a licenses real estate appraiser, since the Realtor will be looking to price it as high as possible.

Licensed Real Estate Appraiser

It is often most cost effective to agree on a licensed real estate appraiser to have the valuation preformed. This service will often cost between $300-$500 on average. Be sure to request a Divorce Appraisal on a General Purpose Appraisal Report, which is specific to divorces. Using a Uniform Residential Appraisal Report is most commonly used in mortgage financing, and runs the risk of not being admissible in court.

This is just one piece in the puzzle that is divorce and your mortgage. Others will be covered in future posts in the series. If you have any questions about valuing your marital home or if you are a family law attorney, in Michigan, and would like more information about how I can be of great value to your divorce team, please contact me. And if you have anything to add about the valuation of homes, as they relate to divorce, please leave a comment.

The post Divorce Lending Series – Part Three – How To Value The Home appeared first on That Mortgage Banker Blog.

• Communication between both parties can help avoid any miscommunication as to who is paying what bill
• Ask each creditor, that extended you credit, to transfer the debt to the name of the person who will be responsible
• Keep joint bills current – even missed payments made years after the divorce will be reported for all people associated with the account
• Ask each creditor to remove a spouse who is only an authorized user on the account.
• On joint credit accounts, advise the creditor which spouse is not responsible for the debts charges, after the divorce
• Close as many joint accounts as possible
• Please access your credit report, annually. Visit annualcreditreport.com, for your free report.

This is just one piece in the puzzle that is divorce and your mortgage. Others will be covered in future posts in the series. If you have any questions about maintain credit during divorce, or if you are a family law attorney, in Michigan, and would like more information about how I can be of great value to your divorce team, please contact me. And if you have anything to add about the credit issues during divorce, please leave a comment.

The post Divorce Lending Series – Part Two – Maintaining Credit During Divorce appeared first on That Mortgage Banker Blog.

Why? Because many things can change during the course of the divorce process. When maintenance (alimony) and/or child support are part of the settlement it has a direct impact on either the debt load or the income stated in the mortgage application. The same applies to marital debt. When one party will be ordered as responsible for the payment of that debt – it also has a direct impact on the mortgage application.

Please be sure to discuss with me whether you have already filed or anticipate filing a petition for divorce in the near future so we can determine a game plan and set realistic expectations for a smooth closing.

This is just one piece in the puzzle that is divorce and your mortgage. Others will be covered in future posts in the series. If you have any questions about the timing of filing, or if you are a family law attorney, in Michigan, and would like more information about how I can be of great value to your divorce team, please contact me. And if you have anything to add about the timing of filing for divorce, please leave a comment.

The post Divorce Lending Series – Part One – Timing Of Filing The Divorce Petition appeared first on That Mortgage Banker Blog.

Now let’s take a closer look at some of the characteristics of a strong Realtor, and some potential problems working with family members.

Experience

Most experts recommend using a Realtor with at least 5 years experience, one that is a state licensed and a full-time Realtor. You would be surprised how many realtors are part-time. This is not to say that a Realtor with less experience can’t do a great job, but the assumption is the longer they have been in the business the more knowledgeable and experienced they are.

Credentials

Like most professions, Realtors have specialties too, like working with first time buyers, or working with military members past and present. Some of the most common designations you will find are:

ABR– Accredited Buyers Representative – Realtors with this designation are trained in working with home buyers of all kinds.

MRP – Military Relocation Professional – Realtors with this designation are trained on working with military members and their families in all aspects of real estate, whether buying or selling.

SRES – Senior Real Estate Specialist – Realtors with this designation are trained in working with our senior population in all aspects of real estate, whether buying or selling.

Realtors also receive awards for their accomplishments, and I have yet to see one who does not promote them. You can check out their website, their office website, or your local Realtor association pages for names of Realtors who have some impressive accomplishments.

Past Client Referrals/Online Testimonials

Past client referrals and online testimonials are a great way to vet a Realtor. Home searching sites, like Zillow, Trulia, and Realtor.com, all have directories of Realtors and their testimonials. Check the dates, just to make sure they are recent, and read as many of them as it takes to get a better idea of their service level and experience.

Working With Family

Family relationships are deeply personal relationships. Deeply personal relationships are sometimes fragile and the stress of purchasing/selling a home, for those who have been through it, can be overwhelming. If your family member is new to real estate and just starting out, your instinct may be to help them, which is commendable, but they may not have the skills and experience other, more seasoned Realtors have and have honed.

If your family member is a well respected seasoned Realtor in your local market, then you might want to hire them! They might be the best Realtor for you because of your family ties. If not, it may be best to seek out a Realtor that better suits your needs.

If you would like a list of well respected Realtors we work with daily, please do not hesitate to ask.

Marc Edelstein is a Michigan mortgage banker, with over 17 years experience originating residential mortgages. You can reach Marc by email at medelstein@rossmortgage.com, or by phone at 248-379-6749. Marc has a super cool mobile app he would like to share with you. It can be downloaded here http://bit.ly/supercoolapp. Please do not forget to share this post with others who would benefit from it, the more the merrier.

Till Next Time

The post Should I Use A Family Member As My Realtor? appeared first on That Mortgage Banker Blog.

I get a lot of questions about real estate and mortgages. For the most part they’re all great ones, but probably like you in your profession, I hear many of the same questions. One of the ones I get quite frequently is  “when is the right time to buy my first house?” My answer is simple, “The Universe Provides“.  I know that sounds a little Pollyannaish, but it is true. The universe will provide the “right time” to buy a house. Don’t believe me? Keep reading.

Like in most big decisions we make, timing is everything, and buying a home is no different. Buying a home sounds permanent, or at least for a little while, and for some it is totally permanent. So you need to be in the “right place” emotionally and financially to be fully prepared to buy a house, or to “invest in real estate” as we in the biz like to say.

So where is the “right place” emotionally? For each it will be different, but the one of the most important questions that must be answered to get to the right place is, how long do I plan on staying in the home? There are several factors that should be looked at when attempting to answer this question. Employment, current relationship status, or lack thereof, and lifestyle all have to be taken into consideration. For instance, if you like working on cars in the garage, you’ll need a property with certain features. Or if you are a pet lover, you’ll look for a property that provides the amenities needed for them. Here are examples of some other questions I recommend prospective homebuyers ask themselves.

• Am I considering a change of employment, or job transfer, which could take me out of state, in the not to distant future?
• Am I going to be getting married/engaged, or even divorced in the next 12-18 months?
• Am I ready to take on the responsibility of being a homeowner? (And there are plenty!)

Once you’ve answered these questions, and others which are too numerous to list, and you have looked into your crystal ball,  you will be in the “right pace” emotionally. Now on to the financials…

Let me first make a blanket statement that is universally accepted, and that is “Investing in real estate, aka buying a home, will always be a better financial decision vs. renting.” Historical home price indexes have provided the data to back this statement up. Even during the Great Recession home prices increased, at a slower pace than normal, but they still went up.

Now, to know if you are in the “right place” financially to purchase a home, we need to start with an analysis of your financial position. Is your income stable enough to qualify for a mortgage? Do you have access to the assets needed to purchase a home? Does your income have the capacity to take on a mortgage? All of these are important questions to answer and all are answered during the pre-approval process with a competent mortgage lender. If you feel comfortable with your financial position, you have made it to the “right place” financially to purchase a home.

As you can see, looking at where where the “universe”  has brought you up to this point in your life, emotionally and financially, will be the most important factor in helping you to decide whether or not NOW is the “right time”.

Marc Edelstein is a Michigan mortgage banker, with over 17 years experience originating residential mortgages. You can reach Marc by email at medelstein@rossmortgage.com, or by phone at 248-379-6749. Marc has a super cool mobile app he would like to share with you. It can be downloaded here http://bit.ly/supercoolapp. Please do not forget to share this post with others who would benefit from it, the more the merrier.

Till Next Time

The post So You Want to Buy Your First Home! appeared first on That Mortgage Banker Blog.

So it’s been a while, but now “we are back from a commercial break”, as my good friend Ken Kellner says over a megaphone in his tiki bar every time someone new walks in. Why is this relevant, you may be asking yourself? Well, during my “commercial break” I honed my writing skills, educated myself on the virtues of content marketing, and have prepared a plan to “let the world know” I am here providing valuable, timely, and insightful content as well as insurmountable mortgage knowledge.

This blog is about home financing and real estate, that’s my shtick. I am a mortgage guy, and have been for the past 17 years. I absolutely love what I do! When people ask me what I do for a living, my standard answer is that I help people and their families achieve the American Dream. I know that’s corny, but it’s the truth. I can talk all day, every day, about mortgage and real estate. I love it so much, I’ve been known to answer my phone in the evenings and weekends to stay consistent with the all day, every day claim

When I was thinking about restarting the blog, I wanted to really focus on providing useful content that homebuyers, homeowners, and realtors seek out when looking for mortgage advice online. With the hopes it will be on-point, well received and shared with others. Some of the content I will post will be directed towards, my friend, the realtor. Why? Because they are my lifeblood. They are the one’s with the buyers, plus I truly want to help them grow their businesses. So you will see some social media marketing posts, posts on lead generation, and systems of follow-up, in addition to mortgage and real estate information.

So with that in mind, I’m going to try to not spend too much time, in later posts, talking about the finer details of mortgage approvals, etc., because I tend to geek out writing about it and it will come across like a bunch of nonsense to those not familiar with “mortgage-ese”. I WILL spend a lot of time writing about the basics of mortgage pre-approval, from credit, and collateral (subject property), to assets and income. There probably will be a video blog or two along the way to better illustrate some of the points, I am sure that will be interesting!

The plan is to post weekly. I am currently working on firming up the content calendar. I am excited to get started! I hope you’re excited to see my next post too!

Marc Edelstein is a Michigan mortgage banker, with over 17 years experience originating residential mortgages. You can reach Marc by email at medelstein@rossmortgage.com, or by phone at 248-379-6749. Marc has a super cool mobile app he would like to share with you. It can be downloaded here http://bit.ly/supercoolapp. Please do not forget to share this post with others who would benefit from it, the more the merrier.

Till Next Time

The post And We’re Back………. appeared first on That Mortgage Banker Blog.

Mortgages can fall in one of two categories. They can be defined as either government-backed or conventional. Government agencies like the Federal Housing Administration (FHA) and the Department of Veterans Affairs (VA) insure home loans, which are made by private lenders. This insurance is paid for by fees collected from mortgage borrowers and protects lenders from default. The US Department of Agriculture (USDA) loans money to lower-income borrowers through its Direct Housing Program. It also guarantees loans made by private lenders through its Guaranteed Housing Loans program. This backing is paid for by borrowers.

Mortgages not guaranteed or insured by these agencies are known as conventional home loans. They include:

• Conforming loans
• Non-conforming loans
• Jumbo loans
• Portfolio loans
• Sub-prime loans

For these mortgages that are not guaranteed or insured by a federal agency, lenders get assurance through a down payment of at least 20% or more. However, a down payment of 20% is not necessarily required for the buyer to get approval on the loan. In these cases lenders will require Private Mortgage Insurance (PMI) to secure the loan.

Private Mortgage Insurance vs. Homeowners Insurance:

 In our experience, first time buyers don’t always understand the difference between Private Mortgage Insurance and Homeowners Insurance.

When you make a down payment of less than 20%, the lender requires private mortgage insurance, or PMI. The policy protects the lender from losing money if you end up in foreclosure.

Homeowners insurance is a policy that protects the homeowner from damages to the property and provides injury liability. “—(This will be added as a photo on the side. -see photo attachment)

About half of all conventional loans are called “conforming” mortgages, because they conform to guidelines established by Fannie Mae and Freddie Mac. These two government-sponsored enterprises (GSEs) buy mortgages from lenders and sell them to investors. Their purpose is to make mortgages more widely available. All conforming mortgages are also conventional mortgages.

Loans that do not conform to GSE guidelines are referred to as “non-conforming” home loans. Non-conforming loans that are larger than loan limits set by the GSEs are often referred to as “jumbo” mortgages. All non-conforming mortgages are also conventional mortgages.

Conventional loans held by mortgage lenders on their own books are called “portfolio” loans. Because lenders can set their own guidelines for these loans and do not sell them to investors, these products may have features that other mortgages do not. For example, a portfolio lender might allow a borrower to use investments like stocks and bonds as security for a mortgage for which she would not otherwise qualify.

Conventional home loans marketed to borrowers with low credit scores are called sub-prime mortgages. They typically come with high interest rates and fees. The government has created special rules covering the sale of such products, but they are not government-backed — they are conventional loans.

Who they’re for: Conventional mortgages are ideal for borrowers with good or excellent credit.

How they work: Conventional mortgages are “plain vanilla” home loans. They follow fairly conservative guidelines for:

• Borrower credit scores.
• Minimum down payments.
• Debt-to-income ratios.

Cost: Closing costs, down payments, mortgage insurance and points can mean the borrower has to show up at closing with a sizable sum of money out of pocket.

What’s good: Typically, conventional mortgages pose fewer obstacles than Federal Housing Administration or Veterans Affairs mortgages, which may take longer to process.

What’s not as good: You’ll need excellent credit to qualify for the best interest rates.

Are you looking to buy a house and need a mortgage? We would love to help! Please leave a comment or Click Here and find the most convenient way for you to contact us.

The post “Everything you need to know about Conventional Loans”- FTHB Series appeared first on That Mortgage Banker Blog.