Great news for People interested in purchasing an existing manufactured home in rural Michigan! You now have more opportunities for financing through USDA Rural Development’s low-interest, no-down-payment home loan programs. Michigan is participating in a pilot program that makes existing manufactured homes constructed after January 1, 2006, eligible for USDA home loans. Previously, only new manufactured homes qualified for these loans.

Here are some requirements when using a USDA home loan for an existing manufactured home:

• Have a floor area of at least 400 square feet
• Be inspected utilizing U.S. Department of Housing and Urban Development (HUD) Form309 Manufactured Home Installation Certification and Verification Report
• Have no alterations or modifications since it was manufactured
• Towing hitch and running gear must have been removed
• Unit must be taxed as real estate
• Remaining economic life must meet or exceed 30 years

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 denied for a home mortgage due to your college student loans give me a call, Matt Watts at 810-919-8138 or visit www.mortgagemattmi.com and I will give you a personalized consultation; no need to call an operator or front desk person this is my direct number.

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 Watts at mortgagemattmi.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 finance-able and banks and credit unions are not approving your property, give me a call at 810-919-8138 and I will help you.