Buyers

The Right Way To Give Or Receive A Gift For a Downpayment

When a home buyer is given cash as a gift for a down payment to purchase a home, there is a right and a wrong way to receive that money.

The right way includes:

• Completing an acceptable gift letter
• Documenting the withdrawal of the gift money with receipts
• Documenting the deposit of the gift money with receipts

The wrong way? Completely ignore the rules that mortgage lenders clearly lay out for you.

Mortgage lenders usually look closely at gifts because they want to be sure that the “gift” is not really just a loan-in-disguise. If it’s a loan, the total dollar amount will need to be counted against the home’s total loan-to-value, and higher loan-to-values typically increase the lender’s risk, so it’s something they try to avoid when they can.

If the money really is a gift, a signed and dated gift letter should accompany the home loan application. Typically, a gift letter will include the name of donor, the name of the recipient, the relationship between the two parties, the amount of the gift, the address of the property for which the gift is to be used to pay for, the fact that no repayment is required or expected, and an assurance that the person making the gift or the source of funds is not in nay way party or beneficiary to the transaction, e.g. not the broker, seller, agent, loan officer, builder and so on. In most cases the person giving the gift will be required to document where the money came from, such as a bank account or a brokerage account.

For additional evidence that the gift is legitimate, the recipient should make sure that deposited funds are not commingled at the bank. If the gift is for $12,000, for example, then the recipient’s bank deposit receipt should indicate that a $12,000 deposit was made.

There may be legal and tax liabilities when gifting funds between family members so if you’re unsure about how donating or receiving a gift may impact you, call or email me. If I can’t answer your question, I can certainly refer you to somebody that can.

8 Oliver, Bangor MI

Remodeled and ready for your enjoyment. The back area has completely rebuilt walls and new plumbing. New electrical throughout house. Two family living areas helps move this from a small home to a rather spacious home (1192 s.f.). Toy room up front with living in area in rear or vice versa. Closets in all bedrooms. Laminate flooring in back. Original oak flooring in front. Porcelain tile in bathrooms. New appliances to get you started on the right foot. Kitchen window allows you to keep an eye on the kids in the fenced in yard. Well kept homes in neighborhood helps secure your investment. Well insulated attic (R-45) keeps the costs down. Insulation underneath flooring in front and insulation in all exterior walls add to the warmth. Good price (check the competition) with a bit more room than most.

1101 54th St, Grand Junction MI home

BIG PRICE REDUCTION!! This home has a delightful setting. It is only 1 acre, but with the trees surrounding the property you feel like you’re way out in the country. Concrete sidewalks provide easy, safe accessibility. Nicely landscaped plants by walks. The inside has been well kept up and is ready to warmly welcome you in. The master bed and bathroom are nice sized. The LR (12×15) gives plenty of room for the family or for entertaining. The third bedroom doorway was modified to make it a den, but could easily be modified back to a bedroom (or leave it the way it is). The kitchen has oak cabinetry (upgraded at the factory) and looks very good, with ample room in kit. The back porch invites you to sit outside and enjoy the country. The garage is plenty big (24×24) giving you lots of room. Lights by the driveway and doorways help brighten the dark night. Set on block walls (not skirting). Wired at factory for AC. This home is a wonderful place. Subject to short sale.

46404 28th Ave, Bangor MI home for sale

This country home was totally rehabbed 6 years ago (per owner). A new water softener, electric, plumbing, insulation and furnace were all installed at that time. Very clean, welcoming sense. Though modest sized, it is bigger on the inside than it looks. Plenty of room in the kitchen for all the baking needs. Dining area provides lots of room and living room is nicely sized. The basement is almost a full basement. One area is a crawl space (concrete floor). The 3.5 acres provide lots of room for the kids, garden or horse. The pole barn is quite large (2200 s.f.). It needs a bit of work in one area, but is in good shape. The floor is completely concreted. it has a double door and easily used as a garage. Out in the country but not too far from M43 for easy access to K’zoo or the beach.

70013 16th Ave, South Haven Michigan Home SOLD

Owner wants an offer!! Make an offer and the owner will work with bank, needs to sell ASAP!!

Here is a great 3 bedroom, 1 1/2 bath ranch priced to sell. This home with acreage has had some recent updates and is just minutes from South Haven. Breezeway between house and garage. A must see. Seller will look at all offers. Square footage, room dimensions and site dimensions are approximate.

Call or email today to schedule a viewing:

Tom Frame - (269) 580-2259 or tframe {at} kalvan.com

5085 103rd Ave, Grand Junction Michigan Home SOLD

This home sits on a 1.13 acre lot that overlooks beautiful Osterhaut Lake. The Custom Built home is brand new and has never been lived in. The kitchen and living room have 17 ft. vaulted ceilings. The kitchen is furnished with wood flooring and Maple cabinets, along with formica countertops and Moen faucets.

The living room has a woodburning fireplace with a custom built oak mantle. Off of the front of the home is a large wooden deck to relax on. This well built custom home comes complete with Copper water lines, 200 amp electrical service, 90% gas furnace, recessed lighting, ceiling fans and much more.

Contact Tom for more info, and to see this property!
(269) 580-2259 or email at tframe {at} kalvan.com

Rehabbers Dream

PENDING SOLD!

The first dumpster was filled & carted. The inside clearing has begun and the front porch was opened up to really enhance the attractiveness of sitting outside. Now, you can continue the rehab needed to get this big house (4 bedrooms) into shape.

The garage is big. The double lot offers room enough to let the kids play at will. The back overlooks the ravine for the Black River running through town, so you can fish without the time and expense of traveling.

A land contract is possible. Rehab and sell or live in it yourself. Either way, this house is waiting for you to bring it back to life and make it the beauty on the block.

Technorati Tags: Tom Frame, rehab property, investor property, Bangor MI home

South Haven and Bangor Homes - Should you buy mortgage points?

This is part 2 in a series about understanding your mortgage. Read more: Understanding Mortgage Points

You can also “buy” points to improve the interest rate you get on your mortgage.  If you have the available cash on hand, and have long-term plans to stay in the house, you may think about “buying down” points to qualify for a better interest rate.  Though you’ll have to bring more money to closing, you’ll enjoy lower monthly payments over the life of your mortgage.

Generally, for each point prepaid, the interest rate on your mortgage will drop about a quarter (.25) of a percent (unfortunately it’s not a one-percent-for-one-percent deal!)  Additionally, lenders usually set the number of points that you can prepay (so you can’t just pay a little more for a 0% nterest rate).

When to Buy Down Points

When should you prepay points?  It depends.  If you have the extra cash on hand, there might be a better way to invest it.  Sit down and do the math before you decide (I used to be a teacher, so I’m happy to help with this).  Divide the total cost of the points by the savings in each monthly payment.  That answer is the number of payments it takes to break even.  If the number of months to payback is longer than you plan to have the mortgage, another loan option should be considered.

If you don’t have cash available, don’t think about borrowing it.  Doing so will increase your loan amount and total costs because you’ll be paying interest on that for the life of the loan as well.

If you’re looking to buy real estate in South Haven or Bangor, you really need to understand all of the costs of your mortgage.  I’d be happy to meet with you to explain!

South Haven and Bangor Michigan - Understanding mortage points

You need to understand ALL of the costs of your mortgage!

When you’re getting ready to purchase a South Haven or Bangor home, it’s really important that you understand all the different costs that are involved with your home purchase.  Today we’ll talk about what it means to pay “points” on your mortgage.

Points are simply fees paid to receive a home mortgage. Consider them your “cost” to get a mortgage.  Each point is 1% of the total loan amount.  So, one point (one percent) of a $80,000 loan is $800.

The two most common types of “points” are:  Loan origination points and Discount points.

Loan Origination Points are the fees that your lenders will charge you to obtain your mortgage. Similar to interest rates, points (or sometimes even fractions of points) will often vary between lenders.  Some lenders don’t even charge points, so take the time to shop around.

Discount Points are the fees that lenders charge for the interest rate you’ll pay on a mortgage.  Once again, one point equals one percent of the total loan amount.  The numbers of points charged changes with the time, location, lender and the local mortgage and investment market.

More discount points may be charged if you have had credit problems. Sometimes, lenders may also only qualify you for a higher mortgage rate than advertised.  Those with poor credit may find they have to pay anywhere from 2 to 4 times the points as those with good credit.  That’s why keeping a good credit history and comparing all the costs of a mortgage is so important.

Read more: Should you buy mortgage points?

If you think you’re ready to purchase your South Haven or Bangor home, you really owe it to yourself (and your bank account) to really understand your mortgage. I’d be happy to meet with you and answer any questions you may have. Feel free to call me at (269) 580-2259, or email me at tframe (at)kalvan.com

First-time-buyers: Glossary of Basic Terms

If you’re new to the real estate market, it’s always good to familiarize yourself with some of the unfamiliar terms. You don’t want to agree to something you’re not comfortable with, simply because you didn’t know what the term meant. Here are a few basic terms that I think first-time buyers in South Haven and Bangor should know.

Annual percentage rate (APR): Yearly interest on a loan, expressed as a percentage. Includes fees and other costs so you can compare offers from different lenders. The lower the APR, the better.

Appraisal: An estimate of a property’s value. A lender will usually require an appraisal, and won’t approve a loan for more than this figure.

Back on Market (BOM): A property that has been relisted because a previous deal fell through. These are often described as “no fault of seller” to assure buyers that there is nothing wrong with the house.

Closing attorney or escrow agent: A neutral party, they work with all parties - the lender, title insurance company, buyer and seller - to make certain that all the details of the closing come together without a hitch.

Comparative Market Analysis: These are also known as “comps”, and are a comparison of the value of a certain home with other similar properties in the area. They are usually based on sales and offering prices, along with number of bedrooms, similar home features, land acreage, etc. As your agent, I will put these together for you when you’re starting to zero in on a specific house, to make sure that it is appropriately priced, and a good value for you.

Credit bureau score: a number showing how likely you are to default on a loan, based on your credit history.

Down payment: The amount of a home’s price you pay in cash; usually from 0% to 20%

Lock-in: A lender’s guarantee that you’ll get a specific interest rate if your loan is closed within a certain period. Interest rates can change at any time, so if you think you have a good rate, be sure to lock it in.

Mortgage banker: A lender, bank or company that provides loans.

Mortgage broker: A person or firm that arranges loans from multiple lenders.

Preapproval: A lender’s promise (subject to final guarantee) to supply you with a specific amount for a mortgage.

Prequalification: A lender’s informal estimate of the maximum you’d be allowed to borrow.

Private mortgage insurance (PMI): Protects the lender if you default on a mortgage; only required if your down payment is less than 20%.

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