Detroit Real Estate

FHA said it is trying to better position itself to "manage its risk while continuing to support the nation's housing market".  One widely speculated change wasn't made -- the increase of the FHA minimum down payment.

Here are the new FHA rules coming on April 5, 2010. 

Home buyer's can still buy with just 3.5 percent down.  However, there are 2 major changes that you must be aware of and will be effective for any case number assigned starting April 5th, 2010.

1.   An increase in Upfront MIP from 1.75 percent to 2.25 percent

2.   A reduction in maximum seller contributions from 6 percent to 3 percent.

Russ Ravary your Livonia real estate agent

When you buy a house one of the goals you should have is too pay it off.  Yes I think that should be your goal.  Too many Michigan home owners right now are paying the price for using their house as a bank. 

 Homeowners used the house to pay off credit cards, take trips, pay off college education, pay for weddings, pay for cars.  Houses were being used as a bank.  I know one guy that built a house 18 years ago for $180,000.  He had a $120,000 mortgage on it.  By the time he lost it he had run up the mortgage up to $330,000.  He couldn't afford the payment anymore.  He lived off the house.  He let it go into foreclosure.  Now he is 53 years old with no house and won't be able to buy a house until 55 years old.

Sad.  He will be living in an apartment or have a mortgage payment when he is retired.  Having a mortgage payment when you are retired is not what you want to do.  I think all the financial planners that spout that garbage are stupid. 

Less debt is better!  Having no mortgage is the way to go.  So it pays to pay off your mortgage early.  So make it your plan to pay off your mortgage.

So my thoughts are:

1. pay your payments on time
2. don't take out home equity loans
3. Don't use your home as a bank
4. If you have extra money put some extra on your house each month or year.

Again these are just my thoughts.  It's your house and whatever you do is fine.

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Here is why the bank took a lower cash offer over your offer on the West Bloomfield home. 

Cash deals are usually king.  The banks will usually take the cash offer over a mortgage offer. 

Banks prefer cash deals for these reasons:

• cash deals can close within a month.  They close quicker than mortgage deals that take 30 to 60 days..
• cash deals don't require an appraisal.  There is no chance that the deal will fall apart because the house didn't appraise.
• cash deals don't have a mortgage.  The deal can't fall thru because of mortgage problems such as debt ratios, and underwriting issues.
• cash deals don't depend on the buyer having a job.  If the buyer loses their job on a mortgage deal the deal is dead.  With cash deals it can still close.
• cash deals have already proved they have the money.  When you put in a cash offer you must get a proof of funds letter.  The letter comes from your bank and states that you have a certain amount of money in your account. 
• cash deals will be accepted when there are repairs that will need to be completed for a FHA loan, VA loan, or a conventional loan.  
• cash deals don't have an out. If you don't close with a cash deal you lose your money.  If you have a mortgage you can get your deposit back if the house doesn't appraise or if the mortgage doesn't go through.

Many times banks will take a lower cash offer over a mortgage offer.  It just depends how big of a difference there is.  I lost a deal on a piece of Livonia real estate on a cash offer.  The list price on the Livonia ranch was $61,000.  My clients bid $81,000.  The bank accepted an offer of $55,000.

That was a $26,000 difference.

I hope this explains why the bank took a lower cash offer on the West Bloomfield real estate you loved.  So if you can afford it,  bid cash. 

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                                              How to chose the right Metro Detroit home

                                                                                                      Thompson Lake real estate Howell MI

Russ Ravary your Livonia real estate serving Oakland and Wayne County real estate

 Here is a quick explanation of what a Metro Detroit bi-level home is.  Basically it is a home that the basement is half out of the ground.  A Metro Detroit bi-level home is two stories.  The bedrooms are usually on the top or second level.

The bottom level or 1st level is finished and counts as square footage.  There is no basement in a bi-level home.   The basement is basically the first level.   The furnace, the water heater is on the first floor and takes up part of the space.  When you come in the door on a bi-level home there are steps up or down.  You don't come straight into any floor.

When you compare a bi-level home's square footage I always say it is not actual square footage.  Let's say a in the MLS a ranch home has 2000 square foot listed and a bi-level home that has 2000 square footage.  The ranch home actually has more square footage.  The ranch homes basement is not counted in the MLS square footage.  So when you add up the ranch homes basement to the 2000 square foot, the ranch homes total square footage will be much more than the bi-level's square footage.  Simply because the bi-level counts the "basement" (1st level) as square footage.

So when buying a Michigan home remember a bi-level's square footage is not "true" square footage.  A ranch, a cape cod, a tudor, a colonial that has the same square footage will actually have more living space when you count their basements.

I hope this explains what a Metro Detroit bi-level home is?

If you have more questions about split level homes or Metro Detroit bi-level homes feel free to give me a call or email me.  

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My quote of the day:

I got a call from a young first time home buyer and he wanted to know what a short sale is.  So let me explain what the definition of a short sale is. Let's say a Livonia homeowner owes $220,000 on their ranch home.  But now that piece of Livonia real estate is only worth $150,000 and the home owner lost his job.  They can't afford the house any more.

They can't sell the house for $220,000.  So a home buyer can buy another similar Livonia ranch for  $150,000 so why would they over pay.  So what the home owner has to do is ask the bank to take a loss.  Or the bank is going is going to get the house back in a foreclosure.

They have to ask the bank to do a short sale.  The bank has to agree to sell this piece of Livonia real estate for $150,000.  The homeowner may or may not be behind on their payments.  

So basically if you see the words "short sale"  it means that both the bank and the homeowner have to agree to sell the house at a loss.  The bank is in total control whether the sale goes through.  It takes a long time to get a short sale done on a home.

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