Lee Morof's Real Estate Blog

Before you start shopping for your new Bloomfield Hills home, take the steps to get pre-approved for a home loan. Being pre-approved gives you a few advantages when you are shopping for Bloomfield Hills real estate:

• You know how much you can afford to pay for a home. This saves you time and reduces your frustration because you can look at only those homes that are within your price range.
• It makes you a more attractive Bloomfield Hills real estate buyer to sellers because they know you can get a loan to purchase their home.

In order to get pre-approved for a loan, you need to:

• Find a lender. Shop around because there are a variety of terms and rates. Getting pre-approved does not obligate you to that particular lender.
• Provide your financial information. Be prepared to supply your annual gross income, current expenses and debts. Give the lender copies of the last two most recent income tax returns, W2 or 1099 statements for the last two years, bank statements (checking and savings accounts) for the last few months, two most recent paycheck stubs or proof of income and any retirement savings account statements.
• Fill in your employer information. You’ll need to give your employer’s name, address, how long you have worked at your current job. If you’ve been at your current job for less than two years, be prepared to provide information about past employers.
• Allow the lender to run your credit report.

Be very precise when disclosing income and debt levels. The lender will verify every item to make sure they are accurate. Misrepresenting information on the pre-approval form will only hurt you in the end.

A pre-approval for a loan is more important than a pre-qualification. A pre-qualification only says you look like you qualify for the loan without any financial information being investigated.

If you would like more information about getting pre-approved for a home loan to purchase Bloomfield Hills real estate, or would like a referral to a lender, feel free to call Realtor and Attorney Lee Morof at 248-514-2640 or email info@NorthWoodwardHomes.com.

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

As home buying picks up pace with spring in full bloom, there are a few tips every Bloomfield Hills real estate buyer should keep in mind:

1. Plan to stay in the property more than 5 years.  Typically home values appreciate 7% per year; that number has been 2% to 5% recently, so it will take longer to break even and begin making a profit or building equity in your home.
2. Do the math.  First, figure out what price range you can afford.  Then, calculate how much income is left after paying the mortgage, taxes and insurance.  Use an online affordability calculator to make this easier.
3. Explore the neighborhood.  At various times of the day and night, visit the neighborhood of a Bloomfield Hills home you are interested in.  Find out if it’s an area in which you’ll enjoy living.  How are the schools, the traffic, the noise and the neighbors?
4. Find the right agent.  Interview at least three Bloomfield Hills real estate agents.  Make sure they’re experienced, knowledgeable and professional and that your communication styles mesh.  They will be overseeing the most expensive decision of your life, so take the time to find the best person for the job.
5. Shop for your mortgage.  Shaving even a half a percentage point off your mortgage rate can save you thousands of dollars.
6. Get pre-approved. Before you start house hunting, get pre-approved for a mortgage. You’ll save yourself the grief of looking at houses you can’t afford. Being pre-approved will also improve your chances of getting the sellers to say yes to your offer. Not to be confused with pre-qualification, which is based on a cursory review of your finances, pre-approval from a lender is based on your actual income, debt and credit history.
7. Hire a home inspector. Have the property checked out by a professional home inspector. Even if you and your agent carefully look over the home, there can be hidden problems only a home inspector can find.

If you’re looking for a Bloomfield Hills real estate agent to help you buy a home, I’d be honored to be considered for the job. Give me a call today at 248-514-2640 or email me at info@NorthWoodwardHomes.com to schedule a time to interview me.

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

The mortgage application process can be confusing — so you only want to have to go through it once when buying Bloomfield Hills real estate.  Keep these tips in mind as you complete the application process to make sure you get the answer you want: Approved!

• Make Sure Your Credit is Clear: If there are any lingering issues on your credit report, get them resolved prior to application and get your credit in high standing for the best loan rates.
• Lower Your Debt: If you meet the income requirements, but have substantial debts elsewhere – car payments, student loans, credit card debt – your application may be denied.  Budget, save up and pay off as much as you can.
• Have the Required Income: With the tightening of regulations, any wiggle room you may have had before is gone. You must meet the income requirements for the loan.  Remember that not all income may be counted toward your loan – rental property income, for instance, is often excluded.
• Negotiate the Repair of Any Condition Issues with the Seller: Lenders are leery of extending loans on any properties that could later be deemed distressed.  Issues turned up during the appraisal process should be addressed for loan purposes, as well as your own comfort and safety.
• Follow the Instructions: The stacks of paperwork documenting your application are a nuisance, yes, but they are required.  Do the work and make sure your application is complete.

Put these tips into action and your application is more likely to be approved.

If you’re ready to buy Bloomfield Hills real estate, I can help. Whether you need help finding a reputable lender or a home to buy, 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

If you’re thinking about taking the plunge into homeownership, before you even start looking, talk to a qualified mortgage professional to get preapproved for a home loan. Armed with that information, you can make better decisions on the type of Bloomfield Hills real estate you can afford to buy.

Follow these steps to get preapproved for a mortgage:

1. Get referrals. Ask family, friends, neighbors and your Bloomfield Hills real estate agent for referrals to a lender with whom they have had a good experience. Talk to several lenders to compare service, rates and other options.
2. Review your credit report. If anything unexpected appears on your report, do what you can to resolve the issues before you apply for preapproval.  Lenders will review your credit report before preapproving you for a home loan.
3. Provide financial information to the lender. This usually includes documentation of your income, recent statements for all your checking and savings accounts, assets and debt (for instance, credit card debt and car payments).

Even though the preapproval process is rigorous, obtaining a preapproval still does not guarantee that the lender will ultimately fund your loan. Lenders still need to look at property appraisals, verify your information and potentially check your credit again before agreeing to give you a mortgage.

Preapproval helps you narrow the focus of your Bloomfield Hills real estate property search to properties that are within your financial reach. It also helps you check out lenders to find one that is the best match for your situation.

When you find the Bloomfield Hills real estate of your dreams, you’ll be ready to move to the next step!

If you’re looking for more information on the home buying process, 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

You know that you can lend money to your child to help him or her buy Bloomfield Hills real estate.  But you’d like to explore some of the other financial arrangements to determine which option is the most advantageous for you and your child.

Here are four additional ways to help your child buy Bloomfield Hills real estate:

1. Give the down payment as a gift.

Before deciding whether to make the money a gift, consider what moral message you may be sending.  You don’t want your child to develop a sense of entitlement and take for granted that he or she can come to you any time they need money.

If you decide you do want to give part or all of the down payment as a gift, consult with your financial adviser to determine the amount you can give away without incurring tax liabilities.

2. Co-sign the bank loan.

This could be all the help your child needs to get a mortgage. It might make sense if he or she is close to graduating college and already has a job lined up or has a solid but irregular income that would disqualify her or him from getting loan approval.

However, there are big risks associated with co-signing a loan. You’re responsible if your child fails to keep up payments, which means the bank will come after you for the money. If your child is late with a payment, it impacts your credit score. If you want to get another loan for a home or some other big expenditure, you may find the co-signed loan uses up your borrowing ability.

Before co-signing a loan, get legal and financial advice.  Also, if your child is married, be sure to have his or her spouse sign the loan and any other written documents that provide the terms of your agreement.

3.   Set up a shared-equity arrangement.

In this arrangement, everything is open to negotiation.  Typically, a written contract spells out that the child (as the homeowner) is responsible for mortgage payments and gets the tax deduction that comes with it, and you (as the investor) are responsible for providing the down payment.

Some of the conditions you’ll want to agree on before finalizing the agreement are who pays the property taxes, whether or not your name will be on the loan and when the investment will be paid back through either selling or refinancing the Bloomfield Hills real estate.

Because of the flexibility inherent in this type of arrangement, it’s crucial to involve your lawyer and have a document drawn up that spells out everything in detail.

Set up a lease-to-own agreement.

Basically, you buy an investment property and rent it to your child.  You can set the terms of the agreement, but here’s how lease-to-own arrangements typically work:

The renter is buying the right to purchase the house later for a given price.  There’s often a large upfront option fee of 1% to 3% of the home’s purchase price.  Or, the option fee can be added to the monthly rent. Usually, some or all of the option fee is credited as a down payment on the purchase of the house.

During the rental period, you still own the home and are legally responsible for it, but your child maintains the property as his or her own. Be sure to have a legally-reviewed contract signed by all parties involved.

If you’re interested in purchasing Bloomfield Hills real estate in Oakland County, Michigan for your adult child or as an investment, I can help.  Give me a call today 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
info@NorthWoodwardHomes.com
www.NorthWoodwardHomes.com

You’ve reviewed your finances and have decided you can afford to and want to help your child buy Bloomfield Hills real estate.  Is lending the money to your offspring your best option?  Here are some questions to consider when making this decision.

1.  Will you need the money later?

If there’s a chance that you might need the money to live on at some point, lending the money to your child is a better option than giving it to them.  You can always forgive part of the loan later on, if you find you don’t need the money to live on.

2. How much should you lend?

Depending on your financial situation, you can lend part or all of the down payment or part or all of the purchase price of the Bloomfield Hills real estate.

If you have enough money to lend the entire mortgage amount, consult with your financial planner to determine if this is the best option for you. Lending the entire amount often offers you more income than you’d get from a bank and gives your child an even lower interest rate than he or she would get with a traditional mortgage.  It also allows your child to deduct the mortgage interest because the loan is secured by the property.

3. Who will receive the mortgage payments?

Decide if you want to receive the monthly mortgage payments or if you’d prefer to have a third party service the mortgage.  If you want to know more about employing a third party to draw up the mortgage contract and accept the monthly payments, look into companies that handle intra-family loans.

4. How much interest should you charge?

As part of the loan agreement, you’ll want to charge an interest rate equal to the IRS-approved Applicable Federal Rates (AFRs). The AFR is the lowest interest rate you can charge without causing any unwanted tax complications.  Work with your financial and legal experts to ensure the loan agreement is in the best interest of both you and your child.

Let me help you find the Bloomfield Hills real estate that meets the needs of you and your child and get it at a great price.  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
info@NorthWoodwardHomes.com
www.NorthWoodwardHomes.com

You’ve been watching the news, reading blogs and you know this is the perfect time for you to buy a piece of Bloomfield Hills real estate.  You want to do all the right things to get the best deal, and you know one of the first steps is to line up your financing.

To help you pick a mortgage that matches your goals and financial situation, here’s an overview of three of the most popular mortgages available today.

Fixed Rate Mortgage

If you plan on keeping your new Bloomfield Hills real estate for more than 10 years and you don’t expect your income to change, this is probably the loan for you.  Although fixed rate loans charge a bit more interest, the rate will never change.  This provides financial stability and the security of knowing what your monthly mortgage payment will be.  By locking in the current low interest rates, you’ll save thousands of dollars over the life of your loan.

ARM (Adjustable Rate Mortgage)

With the ARM loan, the interest rate is usually very low at the beginning but can increase over time.  If you plan on keeping your Bloomfield Hills real estate for only a few years, up to 7, or you expect your income to increase, then this might be a better choice for you. If you expect your income to increase, an ARM loan can allow you to buy a more expensive home now. The drawback to this type of loan is that you do not know what your mortgage payment is going to be; if the interest rate jumps dramatically, then so does your payment.  A particularly popular ARM is the 5/1 ARM.  The interest rate of a 5/1 ARM is fixed for a period of 5 years.  In the 6th year, the loan becomes a typical Adjustable Rate Mortgage.  So if you plan to own your home for less than 5 years, the 5/1 ARM may be your best choice.

FHA Mortgage

If your credit is a bit shaky, an FHA loan may be a good fit for you.  The qualifying criteria for FHA loans are not as strict as for traditional mortgages.  Also, because these loans are guaranteed by the FHA, lenders often allow you to provide a smaller down payment than they would allow for other types of mortgages.  If you’re in a time crunch, an FHA loan may not be right for you; processing times are typically longer than other types of loans because of the government paperwork involved.

If you have any questions about mortgages or need a referral to a lender, 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

There are a few mistakes that many first-time home buyers make.  Here are three of the most common mistakes and how you can avoid them when purchasing your first Bloomfield Hills home.

Mistake #1:  Assuming your credit is good.
The information in your credit report determines whether you can get a loan — and how much interest you will have to pay – so it pays to be certain your credit reports are accurate.

Check your credit reports for free from all three credit reporting companies — Equifax, Experian, and TransUnion — to make sure everything is correct.  If you find errors, contact both the credit reporting company and the information provider (the person, company or organization that provided information about you to a credit reporting company) involved in the errors and ask them to fix the credit report errors.

Mistake #2:  Getting pre-qualified, not pre-approved, for a loan.
It’s far better to be pre-approved for a Bloomfield Hills real estate loan than to be pre-qualified.   Here’s why…

With pre-qualification, your lender does a preliminary evaluation of your ability to pay for a home and gives an estimate of the mortgage amount they’ll give you.  The lender does not verify the information you provide.

With pre-approval, your lender verifies your income, assets, debts and credit history.  They provide you with written confirmation of the mortgage amount for which you’re approved. That written confirmation demonstrates to the seller that you are committed to buying and can give you an advantage over other Bloomfield Hills real estate buyers.

Mistake #3:  Allowing emotions to influence your decisions.
Buying a home is an investment.  It needs to be treated as any other investment.  You don’t buy stocks because they are pretty and you shouldn’t pick your home that way either.  Make sure the home you buy fits your needs and allows you room to grow over the next few years. As with any sound investment, time is the key to a good return.

If you are a first-time home buyer, as an experienced Bloomfield Hills real estate agent, I would be happy to help you find and get the best price for your first home.   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

When you look for a mortgage to purchase Bloomfield Hills real estate, you want to find one that allows you to buy the biggest house possible for a monthly payment you can afford. This seems simple enough. All you need to do is a little division to determine your monthly payment.

Unfortunately, this isn’t the entire picture of your monthly mortgage payment, and lenders don’t always explain this to you. Here are three things you need to know about your monthly mortgage payment for your new Bloomfield Hills home:

1. Interest and Principal. Only part of your monthly mortgage payment actually pays down your loan. A portion of your mortgage payment goes toward your loan principal and part of it pays the interest. The longer you have your loan, the more money goes toward your principal. Be aware that at the beginning of your loan term, most of your payment goes toward interest and does little to reduce the amount of money you owe on your home.

2. Homeowner’s Insurance and PMI. Typically, your lender collects money to pay your homeowner’s insurance premium. This increases the amount of your monthly payment and can change if your insurance company raises or lowers premiums. Depending on your loan amount and property value, you may also have to pay private mortgage insurance (PMI) which protects a lender against loss if you default on your loan.

3. Property Taxes. In most cases, your annual property taxes will be paid through your lender. The lender collects extra money each month that they pay to your local government at the end of the year. When local taxes increase or decrease, so does your payment.

Call me today at 248-514-2640 or email me at info@NorthWoodwardHomes.com to help you find the home (and mortgage provider) of your dreams.

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

If you’re looking to buy Bloomfield Hills real estate in Southeast Michigan, you’re probably already looking at mortgage possibilities as well. Since many buyers are also looking for energy efficient options, I thought it only right that I brought EEMs (Energy Efficient Mortgages) and EIMs (Energy Improvement Mortgages) to your attention.

What are EEMs and EIMs?
An EEM adds a home’s energy efficiency into the mortgage, giving you the ability to finance energy efficient measures as part of the mortgage payment. One of the good things about an EEM is that it stretches the debt-to-income qualification ratio, which means that you can qualify for a larger loan and a more energy efficient home.

An EIM is for existing Bloomfield Hills real estate that you plan to make energy efficient improvements to. You can include the cost of the improvements into the mortgage without raising the down payment. In addition, whatever you save in utility costs from the improvements can go to finance more improvements.

Qualifications
If you’re trying to qualify for an EEM or EIM, you’ll need to have a home energy rating conducted first. This is to give you an estimated Energy Savings Value – the value of the measures and the estimated monthly energy savings.

Types of Energy Mortgages
There are several types of energy mortgages available:

• Conventional – sponsored by Fannie Mae and Freddie Mac, these EEMs give the Fannie Mae approved lender the ability to raise your income, matching a dollar for each estimated dollar gained through efficiency.
• FHA – Lenders can add 100% of the cost of improvements to an approved FHA loan, up to $4,000 or 5% of the home value (maximum of $8,000). FHA loan limits won’t stop you from getting the EEM. You can find out more about the FHA EEMs on their website. 
• VA – Veterans Administration EEMs cap energy improvements at $3,000 to $6,000, and are for buying existing Bloomfield Hills real estate. If you’re a qualifying reservist, veteran or military personnel, you can find more information on the U.S. Department of Veteran’s Affairs website.  
• Last but not least, there is the Energy Star mortgage pilot program. Currently, it is only available in a few states, but it’s growing to include others.

If you’re interested in making energy efficient improvements to an existing home or buying a home that’s already energy efficient, I strongly recommend that you look into EEMs and EIMs.

If you’re looking for an energy efficient home or one you can make energy efficient, I can help. Call me at 248-514-2640 or email me now at info@NorthWoodwardHomes.com for more information.

Lee Morof
RE/MAX Showcase Homes
Birmingham, Michigan
www.NorthWoodwardHomes.com
info@NorthWoodwardHomes.com
Call:  248-514-2640