Return to Home Ownership, a work shop for people that have lost their home

For those that have lost their home because of bankruptcy, foreclosure, short sale or other financial event, a Return to Home Ownership is easier than many of them may think.

The “Return to Home Ownership” no obligation, no pressure, educational workshop will help people that have lost their home to bankruptcy, foreclosure, short sale and other derogatory credit events to create a path to buying a home.  The date and time for this no cost event is May 19, 2015 at 7:00 to 8:00 pm.  It is being held at the offices of Real Estate One, 26236 Woodward Avenue, Royal Oak, Michigan.

Home ownership is one of life’s biggest dreams.  It can be a deeply satisfying experience.  It provides a sense of security and control over the lives of the owners and their families.  It also provides both a tax deduction for the mortgage interest and property taxes as well as a return on investment over the long term that out performs most other safe investments.

Many people in the last housing downturn and slow economy lost their homes.  Foreclosure, short sale, bankruptcy and many other events forced them to leave their cherished home.  Job loss and other credit issues also placed pressure on the family resources forcing them to sell their home.  Now, they are renting and not taking advantage of all the benefits of home ownership.

For someone that lost a home, they may think that it is impossible to overcome the loss and Return to Home Ownership.  But, not only isn’t it true, recovery is much easier than most people think.

The “Return to Home Ownership” no obligation, no pressure, educational workshop will provide the information and tools needed to create a path to home ownership.  It will address:

How long to wait before applying for a new mortgage;

The steps to applying for a mortgage;

Documents needed for a mortgage application;

The home buying process;

Insurance issues; and,

Closing process.

This no pressure, no obligation, free educational workshop is coordinated by Morris Hagerman, Realtor for Real Estate One and other home buying services offered by the Real Estate One Family of Companies.

For more information contact:

Morris Hagerman, Realtor

Real Estate One, 26236 Woodward, Royal Oak, Michigan  48067

248-854-8440

morrishagermanproperties@gmail.com

www.morrishagermanproperties.com

Morris Hagerman is a local real estate agent with Real Estate One in Royal Oak, Michigan.  He serves Berkley and the other Woodward 5 communities in southeast Oakland County. The Woodward 5 communities are Berkley, Ferndale, Huntington Woods, Pleasant Ridge and Royal Oak.  He is a resident of Berkley and member of the Berkley Chamber of Commerce.

Full List of presenters:

Real Estate One:      Morris Hagerman      248-854-8440

John Adams Mortgage: Mark Sera               248-760-0288

Insurance One:        Leah Wood              248-864-3292

Capital Title:            Debra Paone            248-414-1255

You DON’T need 20% down to buy a home

“How America Views Homeownership” in a recent survey revealed that 68% of Americans feel that now is a good time to buy a home.  Of those that don’t already, 95% said they want to own a home.

“Over the last couple of years, the home buying process has changed in many ways,” Jason Stiltner from Charter One Bank said.  He continued, “But the survey found that Americans still want to own a home.  They also think this is a great time to make that purchase.”

But, there is confusion behind the numbers.  Many people that don’t currently own a home are concerned about taking the step to make the purchase.  They feel that qualifying for a mortgage or moving through the process is difficult and that they aren’t qualified.

74% percent of the people surveyed said they understand the process.  But some of follow up answer they gave suggested that they may not understand the process as well as they think.

• 30% of respondents believe that only individuals with high incomes can obtain a mortgage
• 64% of respondents believe they must have a “very good” credit score to buy a home
• 44% believe that a 20% down payment is required

Much of the above beliefs are unfounded.  

In a recent blog post, Freddie Mac confirmed that there are many people that have some of the facts wrong about the amount of money needed for a down payment.

“Did you know 40 percent of today's homebuyers using mortgage financing are making down payments that are less than 10 percent? And how about this: since 2010, the number of people putting down less than 10 percent for conventional loans has grown three fold.  So, not only are low down payment options real, they represent a significant portion of today's purchases.”

In a separate Executive Perspectives, Christina Boyle, Freddie Mac’s VP and Head of Single-Family Sales & Relationship Management explained further:

• A person “can get a conforming, conventional mortgage with a down payment of as little as 5 percent (sometimes with as little as 3 percent coming out of their own pockets)”.
• Qualified borrowers can further reduce the down payment coming out of their own pockets to 3 percent by lining up gifts from family, grants or loans from non-profits or public agencies.

Boyle talked about the importance of educating potential buyers:

“Letting more consumers know how down payments are determined could bring more qualified borrowers off the sidelines. Depending on their credit history and other factors, many borrowers can expect to make a down payment of about 5 or 10 percent.”

Stiltner agreed with Boyle. “If prospective home buyers get the facts, they will feel empowered to ask lenders and real estate agents questions about available options, such as down payment assistance or FHA loan programs or VA loans for veterans.”

The bottom Line is get the facts and you are going to be pleasantly surprised.  

Morris Hagerman is a local real estate agent with Real Estate One in Royal Oak, Michigan.  He serves Berkley and the other Woodward 5 communities, including Ferndale, Pleasant Ridge, Royal Oak and Huntington Woods.  Hagerman is also a member of the Berkley/Huntington Woods Area Chamber of Commerce.  You can contact him by phone at 248-854-8440, email at morrishagermanproperties@gmail.com or visit his web page.

Lenders reduce required credit scores for FHA loans

BY E. SCOTT RECKARD

February 27, 2014, 9:00 a.m.

Here’s some welcome news for first-time and lower-income mortgage borrowers: Home loans insured by the Federal Housing Administration are getting easier to come by.

The average credit score on FHA-backed loans declined steadily in 2013, Inside Mortgage Finance reported Wednesday.

The trade publication said FHA borrowers’ average debt-to-income ratio – a measure of how much of their earnings are needed to keep up with housing and other debt payments – rose noticeably as well. That's another sign that banks have eased up a bit.

The trend appears to be continuing, as actions by No. 1 home lender Wells Fargo & Co. illustrate. Since January, Wells employees have been allowed in some cases to qualify FHA borrowers for home-purchase loans with credit scores as low as 600. That’s considered subprime territory and down from a previous threshold of 640.

The FHA theoretically allows credit scores as low as 580. But lenders, buffeted by defaulted loans and demands that they buy back troubled mortgages that they sold, generally have set standards higher since the mortgage meltdown.

A Wells official said the bank consulted with the FHA’s parent, the federal Department of Housing and Urban Development, and with advocacy groups before making its decision.

“All loan applications are fully underwritten and documented, and borrowers must demonstrate ability to repay,” Wells spokesman Tom Goyda said.

Inside Mortgage Finance said Ginnie Mae, the government agency that issues bonds backed by FHA loans, had reported that as of January 2013 the average credit score on an FHA loan was 701, and the debt-to-income ratio was 38%.

Last month, the average credit score was down to 680, while the average debt ratio had risen to 40.3%.

The average credit score in securities backed by Fannie Mae and Freddie Mac fell last year as well and the debt-to-income ratio rose.

HUD releases "Qualified Mortgage" definition

HUD releases "Qualified Mortgage" definition

WASHINGTON – Today the U.S. Department of Housing and Urban Development (HUD) released its final rule which defines a ‘Qualified Mortgage (QM)’ that is insured, guaranteed or administered by HUD. The final rule will be effective on January 10, 2014 and will apply to mortgages with a case number assignment on or after that date. Read HUD’s final rule.

The Dodd–Frank Wall Street Reform and Consumer Protection Act requires HUD to propose a QM definition that is aligned with the Ability-to-Repay criteria set out in the Truth-in-Lending Act (TILA) as well as the Department’s historic mission to promote affordable mortgage financing options for underserved borrowers. HUD’s rule builds off of the existing QM rule finalized by the Consumer Financial Protection Bureau (CFPB) earlier this year.

In order to meet HUD’s QM definition, mortgage loans must:

• Require periodic payments without risky features;

• Have terms not to exceed 30 years;

• Limit upfront points and fees to no more than three percent with adjustments to facilitate smaller loans (except for Title I, Title II Manufactured Housing, Section 184,Section 184A loans and others as detailed below); and

• Be insured or guaranteed by FHA or HUD.

Currently, HUD does not insure, guarantee or administer mortgages with risky features such as loans with excessively long terms (greater than 30 years), interest-only payments, or negative-amortization payments where the principal amount increases. Moreover, HUD’s existing underwriting standards require lenders to assess a borrower’s ability to repay their mortgage debt. The new limit on upfront points and fees for all Title II non-manufactured housing FHA-insured single family mortgages is consistent with the private sector and conventional mortgages guaranteed by Fannie Mae and Freddie Mac to attain qualified mortgage status under CFPB’s final rule.

The rule establishes two types of Qualified Mortgages that have different protective features for consumers and different legal consequences for lenders. HUD’s Qualified Mortgage classifies a loan as either Rebuttable Presumption Qualified Mortgages or Safe Harbor Qualified Mortgages depending on the relation of the loan’s Annual Percentage Rate (APR) to the Average Prime Offer Rate (APOR), the rate for the average borrower receiving a conventional mortgage. The two categories of Qualified Mortgages are:

A Rebuttable Presumption Qualified Mortgage will have an APR greater than APOR + 115 basis points (bps) + on-going Mortgage Insurance Premium (MIP) rate. Legally, lenders that offer these loans are presumed to have determined that the borrower met the Ability-to-Repay standard. Consumers can challenge that presumption, however, by proving that they did not, in fact, have sufficient income to pay the mortgage and their other living expenses.

Safe Harbor Qualified Mortgages will be loans with APRs equal to or less than APOR + 115 bps + on-going MIP. These mortgages offer lenders the greatest legal certainty that they are complying with the Ability-to-Repay standard. Consumers can still legally challenge their lender if they believe the loan does not meet the definitions of a Safe Harbor Qualified Mortgage.

Furthermore, HUD’s rule covers Title II manufactured housing, Title I manufactured housing and property improvement loans, Section 184 Indian Home Loan Guarantee Program mortgages and Section 184A Native Hawaiian Housing Loan Guarantee Program mortgages.. The rule designates loans insured under these programs as Safe Harbor Qualified Mortgages regardless of upfront points/fees and APR to APOR ratio so as not to interfere with current lending practices until appropriate parameters can be determined.

HUD also adopts CFPB’s list of transactions that are exempt from the ability-to-repay requirements, which includes Reverse Mortgages; Bridge loans with a term of 12 months or less; Construction-to-permanent loans for 12 months or less for the construction phase; Extension of credit by a Housing Finance Agency; Extension of credit by Community Development Financial Institutions; Extension of credit made pursuant to a program authorized by sections 101 and 109 of the Emergency Economic Stabilization Act of 2008; Downpayment Assistance through Secondary Financing Provider made pursuant HUD’s regulations; Community Housing Development Organization (CHDO) provided that the creditor has entered into a commitment with a participating jurisdiction and is undertaking a project under the HOME program; A 501(c)(3) organization that secured no more than 200 dwellings in the prior calendar year to consumers with income that did not exceed the low- and moderate-income household limit as established pursuant to section 102 of the Housing and Community Development Act of 1974 (42 U.S.C. 5302(a)(20)) and the creditor determines, in accordance with written procedures, that the consumer has a reasonable ability to repay the extension of credit.

HUD’s mortgage insurance and loan guarantee programs play a central role in the housing market and act as a stabilizing force during times of economic distress, facilitating mortgage financing during periods of severe constriction in conventional markets. The final rule aims to ensure the continuity of access to mortgage financing to creditworthy, yet underserved borrowers while further strengthening protections for FHA borrowers and taxpayers, alike.

An FHA may not be the best mortgage for everyone

Report on thefiscaltimes.com

The most popular type of mortgage for buyers with low down payments keeps getting pricier and less appealing as more buyers question whether it's still worth getting an FHA loan.

The mortgage insurance premium on loans backed by the Federal Housing Administration has nearly tripled since 2008. A few months ago, the FHA changed its rules to require borrowers to pay for mortgage insurance for the life of the loan.

"FHA loans really used to be a first option for homebuyers with a low down payment," says Scott Schang, a branch manager for Broadview Mortgage Katella in Orange, Calif. "Now, I see people doing them because they have to and not because it's their first option."

The FHA allows buyers to get a mortgage with a down payment as low as 3.5 percent. The underwriting requirements to qualify for an FHA loan generally are less stringent than for conventional loans. But after the recent change and the numerous fee increases, FHA loans are generally not a borrower's best mortgage option, Schang says.

Historically, the purpose of FHA loans was to help low-income buyers afford homes. During the subprime boom from 2003 to 2007, less than 10 percent of the purchase loans being originated each year were backed by the FHA.

After the financial crisis of 2008, when mortgage standards tightened, more borrowers and lenders turned to these easier-to-get loans. About 40 percent of purchase loans being originated by the end of 2009 were backed by the FHA, according to the U.S. Department of Housing and Urban Development's latest annual report to Congress. It dropped to about 26 percent at the end of last fiscal year.

As demand for FHA loans grew, HUD tried to shore up the FHA's insurance fund through a series of hikes in mortgage insurance premiums. The latest increase was in April.

The cost of getting an FHA loan

FHA borrowers are charged an annual mortgage insurance premium of up to 1.35 percent of the average outstanding balances of their loans. The fee is added to the borrower's monthly mortgage payment. The FHA also charges a 1.75 percent upfront fee when the borrower gets the loan.

A borrower getting a $200,000 loan, after making a 3.5 percent down payment, pays $225 per month in FHA mortgage insurance, plus an upfront fee of $3,500. Say you keep that mortgage for 10 years before you sell or refinance -- that adds up to about $30,000 in mortgage insurance fees.

That's substantially more than what a borrower would pay for private mortgage insurance on a conventional loan, which doesn't have an upfront fee. The mortgage insurance premium on a conventional mortgage can be less than half of FHA's insurance, depending on the borrower's credit, according to estimates from mortgage insurance company United Guaranty.

"A conventional loan generally is less expensive for borrowers in almost all cases," says Brian Gould, chief operating officer for United Guaranty, a mortgage insurer.

Why would anyone want an FHA loan?

Homebuyers normally opt for FHA loans because they don't have enough money saved for the 5 percent minimum down payment that most conventional loans require. But even those homeowners should explore their opportunities, including down payment assistance programs, says Rob Chrane, president of Down Payment Resource.

Chrane says there are various programs offered by states' housing finance agencies and city or county agencies that buyers often overlook. They tend to think they make too much money to qualify, when in reality, many of these programs are available to moderate-income families as well, Chrane says.

"I can't say everyone would qualify, but by the same token, the income limits for these programs are not just strictly to low-income households," he says. "They can range anywhere from 80 percent of area median income up to 120 percent of median income."

And if you find a lender willing to offer conventional loans with less than 5 percent down, mortgage insurance won't be an issue as some mortgage insurance companies are willing to insure loans with as little as 3 percent down.

Borrowers with high DTI need FHA loans

Although there are alternative solutions for borrowers with low down payments, some borrowers are stuck with an FHA loan for a different reason, one that can't be easily fixed. Their debt-to-income ratio, or their monthly debt obligations compared with their income, is too high for a conventional mortgage. In lender lingo, the debt-to-income ratio is known as DTI.

"I'd worry less about the down payment and more about the DTI," Schang says. "That seems to be the deciding factor on half of our deals."

Conventional mortgages generally require borrowers to have debt-to-income of 45 percent or less, while the FHA allows borrowers to spend up to 56 or 57 percent of their income on their monthly obligations, such as credit card payments, student loans and car loans, he says.

"There's a huge difference there," he says. "Somebody who has less money to spend at the end of the month is going to get stuck with FHA because that's their only option."

This piece originally appeared at Bankrate.com

Morris Hagerman Properties Index

Morris Hagerman Real Estate One Website

Back to Work program forgives borrowers with bad credit history

A bankruptcy, foreclosure, or short sale should keep you from getting a mortgage any time soon, right?

Wrong.

The Federal Housing Administration (FHA) is releasing a program called Back to Work Program.  It will help people that have had trouble in the past with bankruptcy, foreclosures and short sales that now are back to work and recovering.  

Who qualifies for Back to Work lending?

The FHA program is for people that have had an economic event that was beyond their control.  The administration asks that future borrowers prove the event was due to a loss of at least 20% of their income for at least six months.

Here are some of the events that would qualify a borrower:

• Pre-foreclosure sale
• Short sale
• Deed-in-lieu
• Foreclosure
• Chapter 7 bankruptcy
• Chapter 13 bankruptcy
• Loan modification
• Forbearance agreement

The FHA will forgive the borrower’s history after the drop in income is documented and a one hour counseling session is completed.

Borrowers have the same benefits of other FHA back loans.  There is the 3.5% down payment and the interest rates are no different than any other FHA product.

For more information contact your lender or contact me.

It's worth noting that the loans are otherwise written with the same standards as any other FHA loan. Borrowers can buy a home with as little as 3.5% down, and interest rates are no different than any other FHA product. The general idea is that borrowers shouldn't be penalized for an event outside their control.

A link to: What is an FHA mortgage
A link to: Back to work mortgage

Morris Hagerman is a local real estate agent with Real Estate One in Royal Oak, Michigan.  He serves Berkley and the other Woodward 5 communities, including Ferndale, Pleasant Ridge, Royal Oak and Huntington Woods.  Hagerman is also a member of the Berkley/Huntington Woods Area Chamber of Commerce.  You can contact him by phone at 248-854-8440, email at morrishagermanproperties@gmail.com or visit his web page.

FHA insured mortgage minimum property standards

FHA Minimum Property Standards

The Federal Housing Administration in an effort to promote homeownership and stable communities insures mortgages by private lenders.  An FHA mortgages comes with many advantages including a lower down payment, a lower interest rate and is easier to get qualified.   

An FHA mortgage does comes with stricter guidelines for the condition of the property.  The administration requires that each home meet more stringent safety and habitability requirements then most lenders would require.  This makes it more difficult to get a home approved for a mortgage, but means, the homeowner gets a better home.  

Here is a rundown of the basic safety and habitability standards that FHA appraisers look for in a home.

FHA Minimum Property Standards: Exterior

• A "Marketable", Complete Home

The loan can only be secured by a complete home that is marketable as a single piece of real estate.

• Public Access To The Home

The property must be accessible by public roads or other ways.  If there is no direct access from a public road there must be an easement associated with the property.

• Safe Access To The Home

The access to the property must be from a public or private street that has an all weather surface.  If it is privately owned street it must be maintain by some agreement with other homeowners or by a homeowners association.

• Absence Of Hazards

The home and property must be free of any safety or health hazards.  This could include radioactive material, mudflows and excessive pollution.  Homeowners can provide evidence that the hazards have been mitigated.

• Full Exterior Walls

FHA mortgage guidelines require that structures on a property, or at a property line, be separated from adjoining buildings by a full-height wall. If the full-height wall is an outermost exterior wall, the FHA requires that there be enough space between buildings in order to perform wall maintenance, as needed.

• Property Drainage

FHA-insured properties must be graded so that water drains away from building perimeter walls, and so that water does not pond on the property.

• Sound Construction

The FHA requires that its insured homes be free of defective construction, poor workmanship, evidence of continuing building settlement, excessive dampness, leakage, decay, termites or any other condition that impairs its safety, sanitation or structural soundness.

• Roofing

FHA-insured homes must have a roof which is water-tight and shows no evidence of missing tiles, shingles, or flashing; or signs of leakage.

FHA Minimum Property Standards: Interior

• Room Counts

An FHA-insured property must have adequate space for living, sleeping, cooking and dining. It must also have sanitary facilities including, but not limited to, bathrooms with showers and/or bath tubs.

• Sanitation

An FHA-insured property must have a continuing supply of safe drinking water, sanitary facilities, a safe method of sewage disposal, adequate heating, indoor hot water, and electricity for lights and equipment.

• Utilities

Water, gas, electric and sewer services for an FHA-insured properties must be independent for the property, with no dependence on another property. In a multi-unit building of 2-, 3-, or 4-units where utilities are shared among owners, each unit must maintain a separate shut-off switch for its utilities. Common services including laundry facilities, storage space or heating, are allowed.

• Attics And Crawl Spaces

The attics and crawl spaces of an FHA-insured home must have proper natural ventilation to reduce excess heat or moisture that can lead to structural decay or deterioration. Crawl spaces must be accessible and clear of debris.

Morris Hagerman Real Estate One Website

What is an FHA mortgage?

There actually aren't any “FHA mortgages.”  The Federal Housing Administration (FHA) doesn't write mortgages. What the FHA does is guarantee a mortgage for a lender.  The mortgage should be called an FHA-insured mortgage.

The FHA is the largest insurer of home loans in the world.  The agency was formed in 1934 by then president Franklin Roosevelt.  It was created to promote home ownership and to aid in the formation of stable communities.  In 1965, the FHA was rolled into the Department of Housing and Urban Development.  It has insured more that 34 million homes and properties since its formation.  Currently there is more than $1 trillion in home loans.

Here are some reasons FHA insured mortgages are so popular:

• An FHA insured mortgage will allow a 3.5% down payment.
• The interest rate for an FHA insured mortgage is sometimes a half point lower interest rate than other insured loans.
• The FHA does not assess risk based pricing for condominiums, 2 unit homes, or for credit scores below 740.
• An FHA loan can be easier to qualify for.

Is there a downside?  Well, maybe.  An FHA mortgage comes with strict guidelines for the condition of the property.  The administration requires that each home meet more stringent safety and habitability requirements then most lenders would require. This makes it more difficult to get a home approved for a mortgage, but means, the homeowner gets a better home.  

For information on an FHA loan contact your mortgage lender or call me for more information.

Morris Hagerman is a local real estate agent with Real Estate One in Royal Oak, Michigan.  He serves Berkley and the other Woodward 5 communities, including Ferndale, Pleasant Ridge, Royal Oak and Huntington Woods.  Hagerman is also a member of the Berkley/Huntington Woods Area Chamber of Commerce.  You can contact him by phone at 248-854-8440, email at morrishagermanproperties@gmail.com or visit his web page. 

What to do to apply for a mortgage

You don’t have to be a first time home buyer to wonder what needs to be done to apply for a mortgage.  If you haven’t owned a mortgage before, the application process may seem like a mystery.  If you have, some of the rules have changed.  They are going to change again after the first of the year.

Particular lenders may not need everything mentioned here, but it would be safe to assume that they will.  So build a file to collect all the documents and information.  

1. Credit self check:  They say knowledge is king and it is no less true here.  About three months before you apply for a mortgage, find your credit score and detailed history online with one of the many online services.  Check for erroneous information on the report, or items that are more than seven years old (10 with bankruptcy).  This will give you time to challenge the report and get the corrections made before you apply for a mortgage.  Keep all the paperwork in case the lender asks about it.  

2. Income: Roundup three years of income tax returns and W2s as well as pay stubs for the last three or four months. Most lenders will only require two years of tax returns.  With three years, if the loan officer wants more information, you are ready.  It is also the same with pay stubs, have three or four months worth instead of just two.  A year to date profit and loss statement might be required if you are self-employed.  

Keep the file up to date.  As the weeks progress, add the new documents, even after approval.  When you finally settle on a home and return to the bank, the lender will want to see an update on all documents.

3. Debts: Make sure all of your debts are listed and documented.  When the lender pulls your credit report, they will most likely find all of them.  It is up to you to provide account names and numbers, the amount owed and the what the monthly payment is on each account.  Remember to include not just credit cards, but car loans, student loans and other mortgages.  Have at least three months statements for each and, again, keep the file up to date.

4. Assets: Lenders love to see assets.  In this case, the more the merrier.  Pull together the last three statements for such things as retirement accounts, stock brokerage accounts, mutual funds, savings, checking, etc.  Don’t forget other property, business holdings and rental properties that you may own.

5. Gifts:  Many people receive money from family and friends to help them pay for a new home.  Lenders have less problems with that if it is a gift and not a loan.  Any money that shows up in your assets 60 - 90 days before appling, such as savings and checking accounts, document.  A letter from the provider that it is a gift and not a loan is the first step in documentation.

6. VA Loans: A Certificate of Eligibility (Form DD 214) is need if you are applying for a VA loan and not currently in the military.  For those that are still active, a letter from your commanding officer is needed.  

7. Divorce: Child support and alimony should be reported as income for the recipient and a debt for the provider.  Qualifying documents need to be provided on both sides.

8. Bankruptcy: Sometimes you can get a mortgage two years after bankruptcy if it is caused by a hardship such as a job loss or medical emergency.  That is, if you have establish good credit since.  Lenders require that all the documents for the bankruptcy be fully disclosed.  

9. Foreclosure: After a foreclosure you will need to wait at least two years and maybe as many as five before a lender will approve a mortgage.  Longer if you “walked-away” from a home loan.  As with other issues, lenders will want full documentation.

11.  Approval:  When you are approved, the lender should do two things.  First, they should issue a letter or memo stating that you are approved for a loan with the maximum amount indicated.  (When making an offer, have another stating that you are approved for only the amount of the offer.  But, that is for another blog post.)  Second, they should provide a good faith estimate of the cost of the loan and the worst case estimate on the closing cost.  This part is important.  Not only do you need to come up with whatever the down payment is at closing, you also need to come with cash for the closing cost.

11. Finally: Once you are approved, and have the letter from the bank, don't make any changes in your financial situation until you close on your home.  Don't purchase a car, take out another charge card or run up a balance on another.  Of course, unless an emergency comes up, then document it.  Any changes might just mean that you will fall out of formula and need to start over, or worse, get denied.

This is not a complete explanation of the application process.  There will be many things that come up that are specific to your individual situation.  But, the outline provides you with a great start to a both nervous and exciting time.

Morris Hagerman is a local real estate agent with Real Estate One in Royal Oak, Michigan.  He serves Berkley and the other Woodward 5 communities, including Ferndale, Pleasant Ridge, Royal Oak and Huntington Woods.  Hagerman is also a member of the Berkley/Huntington Woods Area Chamber of Commerce.  You can contact him by phone at 248-854-8440, email at morrishagermanproperties@gmail.com or visit his web page.