Detroit Real Estate

I had to go to bat for my client last month.  A local Metro Detroit loan officer was trying to steal (money) home from my client. 

 My single woman home buyer was being victimized by a local loan officer.  She was buying a Oakland County MI Lakefront home.  When I first met my lakefront home buyer I called the loan officer to go over what my buyer needed in sellers concessions.  He told me she would need about 3.5% sellers concessions.  I point blank asked him what the closing costs would be in the beginning so I could figure out what was needed.  He had told me there were no points for the loan as my client had great credit.

Well tonight the night before closing my buyer got a big surprise.  Her closing costs were much higher.  Some of the things she was telling me made me nervous.  These were some tell tale signs that you should be nervous about a loan officer.

1. You ask for a good faith and you don't get one
2. You ask for a good faith again and you still don't get a copy
3. Your loan officer says not to worry about how much you have to bring to the closing
4. Your loan officer says you have a lot of money your account and doesn't understand that you need some of that money for car payments, your living expenses, and moving expenses

It's not all his money to spend on loan closing costs.  I didn't get the seller's concessions for him to up his origination fee.  This is what the new HUD form was supposed to stop, but it didn't in this case.  So I had to go to bat for my client.

I called the loan officer and asked what was up.  I reminded him that we had talked and he told me in the beginning what was needed.  So why did my buyer need more now?

He told me his $2600 origination fee covered the $800 underwriting fee and his $700 processing fee.  But what about the other $1100.  Well he went on to tell me he has to charge more for "harder" loans.  I asked him what about what he told me in the beginning.  No real good answer from him.  I said fine, that the buyer and I would call the home office in the morning and get a manager.  I left it at that when we hung up.  Well about 15 minutes later the loan officer called back and said he would give the buyer a $762 credit to reduce the closing costs.

My buyer agreed to take it and move on.  I am glad it wasn't one of my referred loan officers that did that.  My buyer had found this loan officer.  He worked for a good company, but....  I myself don't ever try to change a loan officer that a buyer has.  Unless the company is really bad, or the loan officer is attrocious I don't go there.  I haven't had that problem yet.  I feel the buyer knows what they are doing.

But this loan officer is going on my "DO NOT CALL LIST"

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I got an email about buying a Redford home, bankruptcy, and bad credit.  Here is what the email said. 

I don't know what to do, I'm at my wit's end.  I have to have one of the lowest credit scores possible that it is under 500.  I can afford most of the Redford homes that I have looked at.  Most will cost me $300.00 less than the rent that I am currently paying ($800.00 a month) including property taxes.  But my credit is so bad is that I can't get out of the hole, what can I do other than file bankruptcy?  And how will filing bankruptcy affect my chances of getting into one of the homes I like.

 My answer is to this poor guy is:

If you are looking to buy  a Redford home this year you are out of luck, there is no quick fix so you can buy a house.  Sure a credit repair company "MAY" be able get you into a Redford home in six months, but you will be doomed to fail.  Simply because you haven't gotten into the habit of making your payments on time.  I would bet a hundred dollars that you would lose the house in the future.

My suggestion is to take it slow and do it right.  Get into a routine of making your payments on time.  The key in your situation is to file bankruptcy and start over.  But be sure to consult with a bankruptcy lawyer, don't rely on my advice.  You should seek legal advice and make your decision based on their advice.  You have to make a clean start otherwise you will always be in this predicament.  After you file bankruptcy you need to start establishing new credit slowly.  Get one secured credit card and use it to buy gas or groceries.  Pay it off in full each month.

I hate to say it but having a good credit score boils down to making your payments on time.  A good credit score is good credit history.

Now this will take time, but it is the only way.  There is no quick fix to bad credit.  You have to earn it.  You can get a FHA loan 2 years after a bankruptcy.  But you need at least 3 credit lines open for a year with most lenders in this current market.

So don't get upset and feel bad that you can't get credit now.  That you can't buy a home now isn't a bad thing because if you did I would bet you would be in foreclosure within two years.  So start putting your financial building blocks back together.  Bankruptcy first, open a secured credit line, pay your payments in full on time, open a second line after 6 months, don't let anything go over 30 days late.

It's not hard once you put your mind to making your payments on time.  No excuses if you want a home.  So I ask you how bad do you want that Redford home?

My quote of the day is:

For time and the world do not stand still. Change is the law of life. And those who look only to the past or the present are certain to miss the future.

                                                                                            John F Kennedy 

As a real estate agent and previous loan officer I have heard just about every excuse for bad credit.  Having bad credit is easy to do.  I myself had horrible credit as a young man.  My excuse was that I was arrogant.  I owned a small business and when somebody didn't perform a service right, I simply refused to pay them.  My motto was sue me.  I never went through the right process.  One of my bad credit stories was with Gardner White.  Gardner White delivered a table set that I ordered.  The problem was that they only delivered three chairs with the table.  Well they wanted me to wait another 4 hours to deliver the chair on another day.  They had the 4 hour window for delivery.  Well I refused to wait.  I told them to make me first and deliver at a specific time because they made me wait once already.

Well they refused, and I refused to wait again and I never paid them.  So I started down the road of bad credit.  Everybody with bad credit has a story and an excuse.  But I hate to say it, the only ones that I think are credible are loss of job, and medical issues.  The rest of the excuses are laziness, arrogance, and living above your means.

Anybody can spend more money than they make.  Anybody can make late payments.  I have heard so many excuses.  I have heard so many people complain that the banks won't give them a chance.  That the banks won't do a refinance for them.   They get so mad at the bank because they won't give them money to get out of the hole.  That they won't give them a better rate.

The banks make a financial decision for their shareholder to make a loan.  The bank is in it to make money.  They want people that will pay them back.  They don't want dead beats.  They only want to make a profit on lending money.  They don't have a sign on the front of their business that says "CHARITY".  They aren't in the business of giving second chances.  They are in the business of loaning money to qualified borrowers. They have their guidelines and why should they change them for you.  They know the chance of getting repaid.

So it is up to you in 2010 to meet the bank's standards.  Gone are the days of easy loans to poor credit people.  So if you want a loan, now is the time to start rebuilding your credit.  There is no excuse, nobody going to bend the rules to get you money.  So do like I did 25 years ago.  Start rebuilding your credit.  You will be glad you did.  Sure it takes time but it will go by quickly.  Then you will have good credit and good credit scores.  

My quote of the day:

Mankind must put an end to war before war puts an end to mankind.

                                                                                    John F Kennedy

What are debt ratios and what do they matter when buying a West Bloomfield home?  Debt ratios are a key component of what a bank looks at when determining whether or not to give you a home loan. Here is what debt ratios are:

They are your debt compared to your income.  So the bank verifies your income via your paystubs, your W-2's, and tax returns.  Then they take all the debts on your credit report add it to the proposed house payment, property taxes, home owners insurance, and PMI.  That is what they call your total debt ratio.

All your debts including the housing costs compared to your income is the total debt ratio.

The bank also compares just your housing costs (house payment, home owners insurance, property taxes, PMI) to your income.  That is called the housing ratio.  The bank looks at both ratios to determine whether you qualify for a loan and how big of a house payment (house) you can afford.

So when you buy a home the cost of the property taxes and the home owners insurance can influence the price of the home you buy. I hope this explanation of what are debt ratios and what do they matter when buying when buying a home.   It doesn't matter whether you are buying a West Bloomfield home or a Novi home, debt ratios do matter to the bank. 

My quote of the day is:

"When you reach the end of your rope, tie a knot in it and hang on."~ Thomas Jefferson

Cash real estate closings don't take long at all.  Basically in Michigan there are only 5-10 documents that you have to sign when you are buying a house cash.

The title company closer will go over the buyer's statement which is a breakdown of all your costs.  They will show you the deed to make sure your name is spelled right.  (You won't get the deed at closing as the title company will take it to the County to get the deed recorded).

Then there is the property transfer affadavit and the Homestead exemption forms that you will have to take to the local city hall or township hall.  These documents put the property in your name at the local city and let's the city know if you are eligible for the homestead exemption (which gives you a reduction in your Michigan property taxes).

Then the rest of the documents usually are what I call CYA documents.  "cover your #ss" documents are documents that the title company makes you sign acknowledging that the house is being sold as is, that they have no responsibility, and that you can't sue them because of the house condition known or unknown.

So sometimes a cash home closing can take less than 15 minutes

My quote of the day is:

He who asks is a fool for five minutes, but he who does not ask remains a fool forever.

                                   Chinese Proverb