Lee Morof's Real Estate Blog

Mortgage lenders are primarily concerned with your ability to repay your Southeast Michigan real estate mortgage.  They will consider your credit score, debt-to-income ratio and how much you have for a down payment before telling you what you can afford to spend on Southeast Michigan real estate in Oakland County.

Credit Score

One of the first things your lender will review is your credit score.  Credit scores range from a low of 350 to a high of 850.  In this case, the higher, the better.  The lower your credit score, the higher your interest rate and points will be, and the lower the amount of home you’ll be able to afford. If your score is too low, you may not qualify for a mortgage. If your score is low, you may need to take some time to improve your credit score before buying Southeast Michigan real estate.

Debt-to-Income Ratio

Lenders use a formula called the debt-to-income ratio to determine if your income is high enough and your debts are low enough to qualify for a certain loan amount.

Standard debt-to-income ratios are the housing expense (also called the front-end ratio) and the total debt-to-income (also called back-end ratio).  How are these calculated?

• Front-end ratio:  Shows how much of your gross monthly pretax income would go toward the mortgage payment.  As a general rule, the monthly mortgage payment, including principal, interest, taxes, and homeowners insurance, should not exceed 28 percent of your gross monthly income.  To calculate the front-end or housing expense ratio, multiply your annual salary by 0.28, and then divide by 12 months.  This is your maximum housing expense ratio. (Annual salary x 0.28/12 = Maximum housing expense ratio)
• Back-end ratio:  This shows how much of your gross income would go toward all of your debt obligations – mortgage, car loans, child support, credit card bills, etc.  Your monthly debt obligation should not exceed 36 percent of your gross income.  To calculate this ratio, multiply your annual salary by 0.36, and then divide by 12 months.  This is your maximum allowable debt-to-income ratio. (Annual salary x 0.36/12 = Maximum allowable debt-to-income ratio)

Down Payment

Last but definitely not least, lenders consider the amount you have for your down payment. The bigger your down payment, the less risk the lender feels like he is taking on, so you will probably receive a better interest rate. Ideally, you want to come up with at least 20% of the value of your new home as a down payment, to avoid things like mortgage insurance payments.

The mortgage process can be confusing.  I would be happy to go over this information with you in detail, or if you prefer, I can refer you to a well-respected, knowledgeable mortgage lender. Please call me today at 248-514-2640 or email me info@NorthWoodwardHomes.com for more information.

Lee Morof
Associate Broker/Certified Distressed Property Expert/Attorney 
RE/MAX Showcase Homes, Birmingham, Michigan
www.NorthWoodwardHomes.com

When considering whether you should purchase Southeast Michigan real estate, you want to take into consideration the five-year rule. That’s the minimum number of years many experts believe you need to own a home in order to break even on it when you sell it.  Some experts are now suggesting seven years, but in this article I’ll be talking about the five-year rule.

What happens if you own your Southeast Michigan home for less than five years? Often, you’ll lose money because:

1. You pay thousands of dollars in closing costs each time you buy Southeast Michigan real estate. That money does not build equity or increase the value of your home in any way.
2. In the first five years of your home loan, a much higher percentage of your monthly mortgage payment goes toward interest than toward paying down the principal of the loan balance.

How do you beat the five-year rule?

1. Purchase a property you intend to fix up and rent it out at a rate equal to or higher than the mortgage payment.
2. Buy towards the lower end of what you can afford, and make extra payments to pay down the principal.

Why own for five years minimum?

1. After five years, due to the structure of amortized mortgages, the cost of owning a home equates to the cost of renting.
2. The five-year mark is where you typically start to build equity in your home.
3. Rental prices continue to rise; eventually your mortgage payment could be less than a rent payment.

If you’re interested in learning more about home ownership and want to look at Southeast Michigan real estate for sale, call me today at 248-514-2640 or email me at info@NorthWoodwardHomes.com.

Lee Morof
Associate Broker/Certified Distressed Property Expert/Attorney 
RE/MAX Showcase Homes, Birmingham, Michigan
Call:  248-514-2640
www.NorthWoodwardHomes.com

Whether you’ve decided to purchase a new home or list yours for sale, you’ll need to hire an experienced Southeast Michigan real estate agent. Selling and buying homes can be stressful, so you need to be able to trust and rely on your Southeast Michigan real estate agent to do what’s in your best interest, even if they’re acting as a dual agent.

While ‘dual agent’ might be a confusing term, it’s quite simple — the real estate agent is working for both the buyer and the seller of the home. As both parties will have a lot at stake, this could be perceived as a conflict of interest. Below we’ve outlined some of a dual agent’s obligations.

• An agent should disclose dual agency – As soon as a real estate agent realizes that a buyer is seriously interested in a property on which they have a signed contract, they should immediately be honest with both parties about the possibility of dual agency.
• Dual agents should represent both parties fairly – real estate agents are ethically obligated to treat both the buyer and the seller equally should a dual agency occur.
• Dual agents cannot disclose personal information – A dual agent cannot tell the other party about any personal issues associated with the selling or buying of the house, such as a divorce or financial distress. This is important because one party should not have the upper hand during negotiations.

If two Realtors within the same agency represent the buyer and seller, the transaction is still considered a dual agency. It’s completely normal to be a little wary of a dual agency when it comes to selling or purchasing a home with a Southeast Michigan real estate agent. However, it is fairly common, and as long as all parties are treated equally, it usually works out quite well.

If you’re getting ready to sell your home or purchase a new one and have questions about working with a dual agent, please call me at 248-514-2640 or email me at info@NorthWoodwardHomes.com for more information.

Lee Morof
Associate Broker/Certified Distressed Property Expert/Attorney 
RE/MAX Showcase Homes, Birmingham, Michigan
Call:  248-514-2640
www.NorthWoodwardHomes.com

Are you unsure about buying Southeast Michigan real estate in Oakland County? Warren Buffet was recently quoted as saying, “If I had a way of buying a couple hundred thousand single-family homes…I would load up on them and… take mortgages out at very, very low rates…it’s a leveraged way of owning a very cheap asset now, and I think that’s probably as attractive an investment as you can make now.”

Homeownership in the United States is dropping and we are becoming a society of renters, according to a Morgan Stanley Housing Market Insights report.  Why is this happening?

• It’s harder to get mortgages: Banks have made it more difficult for people to become homeowners. If they have marginal credit or small down payments, they won’t get approved.
• Some have a fear of buying: The economic and real estate market collapse caused many people to fear buying a home. Many who could buy Southeast Michigan real estate right now are sitting on the sidelines waiting for the market to recover. If your credit is good and you have the money for a down payment, all reports are saying, do not wait!

Here are a few tips to help you make the most of this real estate market:

• Act now: Savvy investors know the market has started to recover. If you wait for the media to say it’s ok to start investing in Southeast Michigan real estate again, it’ll be too late.
• Earn rental income: If you buy a second (or third or fourth) home or a home you don’t want to live in, rent it and generate income. Large investors are saying single-family real estate is the way to go right now.
• Take advantage of low prices: Prices have fallen dramatically in a lot of markets, while rental rates are increasing.

To find single-family investment properties or your own new home, call me today at 248-514-2640 or email me at info@NorthWoodwardHomes.com. I’ll help you find the property that meets your investment goals.

Lee Morof
Associate Broker/Certified Distressed Property Expert/Attorney
RE/MAX Showcase Homes, Birmingham, Michigan
Call:  248-514-2640
www.NorthWoodwardHomes.com

Preventive maintenance is crucial to the value and upkeep of your home.  Keeping your Southeast Michigan real estate in great shape with regular check-ups will save you the headache and cost of emergency repairs.

Here are six items to add to your outdoor spring maintenance checklist:

1. Clean the Gutters:  Gutters work best when clean and free of gunk.  Check yours for foliage, tree limbs, etc., especially if trees hang over the roof.
2. Make sure the downspouts are clean:  They should point at least two feet away from foundation walls.
3. Check exterior paint: Look for chipped, cracked paint.  Scrape off any failing paint, sand it down, prime the surface, and paint it with a high-quality, low-VOC exterior paint.
4. Brighten your Southeast Michigan real estate with a good power washing: Rent a power washer or borrow your neighbor’s. This should always be one of the first things you do after winter to brighten and freshen the exterior of your home.
5. Trim overgrown trees and hedges: Trim away from the home to discourage growth of mildew and moisture.  Don’t forget to trim along your property line to make it appealing to potential buyers.
6. Rake up all the downed leaves: Leaves will suffocate your grass and stop it from growing.  Pull up weeds and dead flowers and replace with low-maintenance varieties such as pansies, begonias or mums.
7. Inspect trees for broken branches: If the limb is high up, hire a licensed arborist. If you can reach it from the ground, take it down using the three-cut pruning technique, which prevents bark from tearing and creating an open wound on the trunk. If you had heavy snowfall this winter, look for bending branches and check to make sure they produce leaves this spring.
8. Repair cracked pavement: Before weeds have a chance to take hold, repair cracks in your asphalt driveway and concrete walkways. On surfaces that have ruptured from the effects of frost heaving, hire a professional to pour or pave a new surface.

If you’re thinking of selling your Southeast Michigan real estate, I’d be happy to do a walk through at no cost to help you identify repairs or maintenance that will help your home sell faster and for more money.  Call me at 248-514-2640 or email me at info@NorthWoodwardHomes.com to schedule an appointment.

Lee Morof
Associate Broker/Certified Distressed Property Expert/Attorney
RE/MAX Showcase Homes, Birmingham, Michigan
Call:  248-514-2640
www.NorthWoodwardHomes.com

If you are in the market to purchase Southeast Michigan real estate, the first place you need to start is with your credit report.  If it has been more than a year since you reviewed it, now is the time.  Do not wait until you find your dream home before examining your credit report.  If there are problems with it, you could be turned down for the mortgage.

After you’ve received your current credit report, follow these five steps to spring clean your credit report before starting your search for Southeast Michigan real estate:

1. Check your personal information: Is your personal information such as name, address, and social security number accurate?  If not, get that information corrected.

2. Review all the accounts listed: Are they all yours? Are the account numbers correct? Are the account balances accurate?

3. Get credit report errors corrected: Under the Fair Credit Reporting Act (FCRA), both the credit reporting agency and the information provider (that is, the person, company, creditor or organization that provides information about you to a credit reporting company) are responsible for correcting inaccurate or incomplete information in your report. To take advantage of all your rights under this law, contact the credit reporting company and the information provider.

4. Contact the credit reporting agency about errors all errors on the report: Send a letter by certified mail and “return receipt request” so that you can document that the credit reporting company received the letter. Keep a copy of the letter and documents. Include the following in the letter:

a. Copies (not the originals) of documents that support your position.

b. Your complete name and address

c. The facts about the problem and an explanation of why you dispute the information

d. A copy of your credit report with the items in question circled.

5. Contact the information provider about errors they made: In writing, contact the creditor or other information provider to let them know that you dispute an item they’ve placed on your credit report. Send a letter by certified mail and “return receipt request” so that you can document that the letter was received. Keep a copy of the letter and documents. Include copies (not originals) of documents that support your position.

The hardest part of buying Southeast Michigan real estate could be finding the right property for you, or it could be the six to twelve months it may take to clean up your credit report.  Call me today at 248-514-2640 or email me at info@NorthWoodwardHomes.com  with any questions you have concerning your credit and buying real estate.

Lee Morof
Associate Broker/Certified Distressed Property Expert/Attorney
RE/MAX Showcase Homes, Birmingham, Michigan
Call:  248-514-2640
www.NorthWoodwardHomes.com

Recently released figures indicate real estate nationwide and Southeast Michigan real estate in Oakland County are continuing to steadily improve. Here are seven signs that demonstrate the upturn:

1. Housing affordability has risen dramatically. This is due to a combination of reduced real estate prices and record-low mortgage rates.
2. Housing starts are increasing, driven mostly by multifamily starts.
3. Existing home sales increased in January, which is now three months of gains out of the past four months.
4. At the end of January, total housing inventory fell to a 6.1 month supply. According to Lawrence Yun, NAR chief economist, “The broad inventory condition can be described as moving into a rough balance, not favoring buyers or sellers.”
5. There are plenty of home buyers and investors competing for foreclosure sales in almost all markets.
6. Purchases of homes by all types of buyers from seasoned investors to first-time home buyers are on the rise.

Most economists agree that the market is improving. Frank Nothaft, Freddie Mac vice president and chief economist says, “Our outlook anticipates gradual, but steady, improvement in the economy and the housing market, supported by low interest rates and brightening job market prospects.”

This is excellent news for the spring and summer Southeast Michigan real estate buying season that’s just around the corner. If you’ve been considering buying or selling a home, now’s the time to start that process so you’re ready for the hottest season we’ve seen in years.

Thinking about buying or selling Southeast Michigan real estate? Please contact me today at 248-514-2640 or email info@NorthWoodwardHomes.com. I can help you achieve your goals.

Lee Morof
Associate Broker/Certified Distressed Property Expert/Attorney 
RE/MAX Showcase Homes, Birmingham, Michigan
Call:  248-514-2640
www.NorthWoodwardHomes.com

Whether you’re looking to buy or sell a home, finding the perfect Southeast Michigan real estate agent can be tough. The process is often overwhelming and you want to ensure that you have the right person by your side — someone trustworthy, hard-working and who knows what they’re doing!

That is why it’s extremely important to thoroughly do your research when it comes to Southeast Michigan real estate agents. You need to interview several agents, follow through on referrals and ensure they have the proper credentials.

All the acronyms after agents’ names can be confusing, so here are a few that describe specializations you might need:

• SRES – This stands for Senior Real Estate Specialist. The SRES designation is for agents who work with buyers and sellers over the age of 55. If you’re over the age of 55 or are helping your parents who are over the age of 55 buy or sell, you may want to find an agent with an SRES designation.
• NAR’s Green Designation – This designation means the agent has had training in green building qualifications and sustainable business practices. Look for an agent with these acronyms if green living is on your home checklist.
• SFR – This acronym stands for Short Sale & Foreclosure Resource – As the certification indicates, these are agents who specialize in short sales and foreclosures. With the economy forcing many homeowners into one of these categories, it could be valuable to have an expert with this designation help you successfully navigate the tricky processes.

Just because agents have an acronym or two or three after their names doesn’t necessarily mean they’re the right fit for you. However, the designations can give you some clues as to their level of knowledge and areas in which they specialize.

If you have more questions about real estate acronyms and designations or are looking for a qualified, professional Southeast Michigan real estate agent, please call me at 248-514-2640 or email me at info@NorthWoodwardHomes.com.

Lee Morof
Associate Broker/Certified Distressed Property Expert/Attorney
RE/MAX Showcase Homes, Birmingham, Michigan
Call:  248-514-2640
info@NorthWoodwardHomes.com
www.NorthWoodwardHomes.com

The latest statistics indicate that the U.S. real estate market is at or very close to the bottom right now.

On January 18, Bloomberg News reported, “Confidence Among U.S. Homebuilders Climbs to Highest Since 2007.” Bloomberg said, “The confidence measure, which increased for a fourth straight month, improved in all four regions of the U.S. This is ‘yet another indication of the gradual but steady improvement that is beginning to take hold in an increasing number of housing markets nationwide,’ Bob Nielsen, chairman of the National Association of Home Builders and a builder from Reno, Nevada, said in a statement.”

The official data on home prices might not show the recovery yet, because they are always months behind, but most other data indicates that in general the housing market has hit the bottom.

Right now, homes in America are the best value they’ve been in many generations. And right now, mortgage rates are off-the-charts low. In short, now is the time to buy Southeast Michigan real estate.

The reasons to buy now are incredibly basic:

• U.S. home prices are more affordable than ever – by far.
• Mortgage rates are down to record-low levels.
• You can often pay below-market prices on short sales and REOs.

Of course, there is no guarantee that this is the bottom. But with prices this low and with very few other great places to invest your money, now’s the time to seriously consider buying Southeast Michigan real estate. If you can buy now and hold on to it for a few years, it could be one of the lowest-risk, highest-reward investments you ever make.

If you’re still not convinced real estate is one of the best values out there right now, please give me a call at 248-514-2640 or email me at info@NorthWoodwardHomes.com. I will share specific numbers with you about our Southeast Michigan real estate market in Oakland County.

Lee Morof
Associate Broker/Certified Distressed Property Expert/Attorney
RE/MAX Showcase Homes, Birmingham, Michigan
Call:  248-514-2640
info@NorthWoodwardHomes.com
www.NorthWoodwardHomes.com

When walking into Southeast Michigan real estate that is listed for sale, you might notice the seller has applied a fresh coat of paint or installed new carpet. While most sellers make updates like this to make their home more appealing to buyers, they also could be trying to hide faults within their home, such as water damage or cracks.

Sellers are obligated to disclose all major property issues, but buyers should double-check the disclosure statement before signing any sort of contract. Below is important information about Southeast Michigan real estate disclosures:

• If you know it, disclose it. Don’t try to hide anything negative about a home because it could come back to bite you. There are standard documents that sellers can fill out, but know that verbal disclosures can also be documented.
• Things you should disclose. Disclose all renovations, whether or not you were required to obtain a permit. Other normal disclosures include property line disputes, termite problems, indoor pets, consistent neighborhood disruptions and appliance issues.
• Disclosures and inspections are not the same thing. Some people get these confused. A disclosure is something the seller fills out and gives to the buyer. An inspection is conducted by an independent party and might bring to light home issues of which the seller is unaware.
• Improper disclosure can result in a lawsuit. If buyers quickly discover that their new home has serious undisclosed issues or renovations that were hidden and aren’t up to code, they can ask their real estate agent to confront the seller’s agent and seek a settlement. If the seller does not cooperate, the buyers have the right to file a lawsuit.

If you’re getting ready to sell your Southeast Michigan real estate and would like help deciding what to include in the disclosure or if you’d like to buy a home and want to be sure you’re getting all the proper disclosures, I can help.  Give me a call today at 248-514-2640 or email me at info@NorthWoodwardHomes.com.

Lee Morof
Associate Broker/Certified Distressed Property Expert/Attorney  
RE/MAX Showcase Homes, Birmingham, Michigan
Call:  248-514-2640
info@NorthWoodwardHomes.com
www.NorthWoodwardHomes.com