Mortgage and Portfolio Loan Guide

Networking in Livingston County Michigan

I learn something special from everyone I meet.

The young bucks trying to make an impression. The thirty-somethings building their legacy. The seasoned pros with the wisdom you can only gain through a lifetime of persistence and hard work. They all have something special I take away from each interaction.

I attend at least one event or gathering on a weekly basis in Livingston County and southeast Michigan with the goal of connecting with someone. Not necessarily the typical “making connections” with big-wig idea. More along the lines of seeking a genuine conversation with a fellow Michigan professional, and having that “Yup, this is a cool person that I would like to do business with” type of connection.

One event in Livingston County was particularly intriguing. The Livingston County Association of Realtors (LCAR) hosted their annual Education Expo, or “Education Sensation” at Cleary University in Howell, MI. We had the opportunity to be a sponsor for this event, and have a booth like all the other vendors (lenders, inspectors, title insurance, attorneys). What was unique about this event is how there was an incentive for everyone attending the event to visit each vendor booth. When visiting each booth the individual has a “scavenger hunt” checklist they aim to complete. The checklist consisted of pre-written questions to ask each vendor (the questions of course are chosen by each respective vendor). Whoever gets the most correct answers on their scavenger hunt checklist wins a prize!

interesting concept livingston county networking

  • Sponsor an event related to your industry
  • Set up a booth with goodies
  • Come up with a question that you want every one of your prospects to ask you.
  • Ultimately highlighting what specifically separates you from your competition!

Not only do they have to ask you the question, but they have an incentive to write down the answer! Naturally this forces them to not only listen, but it then leads into a memorable conversation. Of course time constraints can limit the effectiveness of the interaction, but you get the point. You are naturally positioned to talk about your business in a way that is unique, and more likely to connect with everyone involved in the discussion (as long as you’re clever with the wording of the question).

michigan first mortgage mug2I didn’t have any idea how powerful that was going to be.

Of course, I was too wrapped up in the preparation of the event, sneaking my business card into each giveaway coffee mug. Little did I know that our heavy-duty coffee mugs weren’t going to have the lasting impact that we were shooting for. It was the quality of the conversations that provided the greatest value. Who woulda thought?

There are so many resources in Livingston County to take advantage of, and help gain exposure for your business. LCAR is great if you’re in the real estate industry. Definitely connect with the Greater Brighton Area Chamber of Commerce as well. They have an event (almost daily) where you have an opportunity to network with local business owners and professionals. Their tireless support  team seems to be truly interested in helping you succeed and grow. Of course the big picture goal in all of this is to create genuine relationships within the community, and change the world! The Greater Brighton Area Chamber of Commerce will surely play a part in that if you’re building your business in Livingston County.

So Your EX Destroyed Your Credit…

Portfolio Loan

Post-Divorce Mortgage

I have seen it countless times. An otherwise “A grade” borrower is left with no mortgage options because their ex-spouse was extremely irresponsible with their finances while going through divorce. Resulting many times in no other option than having to file for bankruptcy, and even foreclose on their home.

For these types of situations there is hope!

FHA, VA, and conventional guidelines are set in stone. As brutal as it sounds, they don’t really care about the sob story. If you had a nasty divorce which resulted in a bankruptcy, short-sale, or foreclosure you’re pretty much between a rock and a hard place if you have any desire to be a homeowner in the next couple years.

So what can you do? You have been a homeowner since you graduated college 15 years ago. Are you really going to be forced to live with family, or rent? NO. Believe it or not, there are lenders out there that take a common sense approach to mortgage loans for people with bad creditlending. Lenders that will look at your situation from a common sense standpoint, and make every effort to understand exactly what led to the circumstances that you’re in. Lenders that will take into consideration that you fell on hard times, but are now back on your feet. These are the lenders that offer in-house portfolio lending. Lending designed to bring common sense back into the home financing world. Where you don’t have to fit inside the little black and white boxes of the strict government guidelines.

Imagine that?  Being treated like a human being instead of a statistic. What a refreshing concept?

So where do you start? The best thing to do is seek out a small-to-mid-size lender, bank, or credit union which offers portfolio loan financing. Find out what their requirements are for these unique loans. Find out what you can do to prepare as best you can. There are still going to be requirements to meet because they want to make sure you ARE back on your feet, and confirm that you do have the ability to repay the loan.

thumb-422147_640Some things to prepare yourself for when getting a portfolio loan:

  1. You’ll probably be required to put at least 10% down.
  2. Points may be required to cover the level of risk they are taking.
  3. Typically there is no mortgage insurance requirement 🙂
  4. You need to have a verifiable income.

 

Other situations when a portfolio loan may be your best option: unique property you’re looking to buy, self-employed less than two years, bad credit because of an isolated incident like a work injury, etc.



You thought you didn’t have a chance in the world to buy a home, but don’t give up. If you’re back on your feet, and you have at least 10% for down payment, home-ownership may be more within reach than you thought.

portfolio mortgage lenders

 

I invite you to reach out to me directly to see if a portfolio loan is the right fit for you.

At the very least I should be able to point you in the right direction.

 

real estate investment loans

Repair your credit today with Lexington Law

Self-Employed Less Than Two Years Mortgage Solution

Update: 3/6/17

No conforming product currently allows for 1 year tax returns as self-employed if self-employed less than 2 years. On a vary rare basis, some lenders will allow for less than 2 years self-employment. 

It is unclear currently on if 2 year tax returns averaged will be acceptable. 

I will keep this updated as new information comes in. The updated guideline is below. -Adam Lesner

For self-employed Borrowers, the number of years of required tax returns will be based on the number of years the business has been in existence:

  • For businesses operating for five or more (5+) years, one (1) year of business and personal returns will be required.
  • For businesses operating for less than five (5) years, two (2) years of business and personal returns will be required.

(the solution may be a portfolio loan if you have extensive experience in same line of work prior to going self-employed and have at least 1 full year tax return as self-employed)

Is it possible to buy a home if you are a “private contractor” or have been self-employed less than 2 years?

The answer is yes it’s possible, but each situation is unique.

Before we dive into how it’s possible, let’s get on the same page of what the root issue is. Being self-employed less than two years makes it difficult for the lender to make a determination of what your actual income is because there is limited history. Since there is limited history, it’s just as difficult to determine the likelihood of that income to continue in the future.

“Okay, but Adam, I can show you my bank statements with deposits of $10,000/week.”

Right, I get it. You make good money. You have cash money sitting in your bank as a result of your business being profitable. The problem: the lender can’t see how much you had to spend in order to get that kind of return unless you have a profit and loss statement prepared, and show proof of how you’re reporting those expenses to Uncle Sam.  So many, maybe even 80% of the business owners that provide tax returns for me to look at, claim substantial write-offs which offset their income in a way that nearly puts them at a break-even point. The solution: get a bank statement mortgage. There are a few different options when it comes to using bank statements as proof of income. Ask me if I can help with your unique situation by using you bank statements as proof of income.

The good news…

person-110303_1280is that there are lenders out there that will take a look at self-employed borrowers, or even 1099 private contractors from a common sense standpoint. Standard loans backed by Fannie Mae, Freddie Mac, FHA, etc. are not going to be the way to go if you’re self-employed less than two years. The guidelines are strict, and the opportunity to be looked at from a common sense standpoint are extremely limited. Your best bet is to find a lender that offers portfolio financing. This is where they lend their own money, and keep your loan in-house. Keeping your loan in-house means it will not be sold on the secondary market, which means it will not have to meet the strict guidelines of conventional and FHA mortgages. You’ll find portfolio lending with the smaller lenders or credit unions in your local areas. They are the companies that are organically grown within the community, and they tend to have more of an attachment to the area.

2 examples that might make sense to get approved for home financing for less than two years self-employed borrowers:

  1. You have been an IT professional for 5 years. Last year you went from being a W-2 employee to a 1099 employee (private contractor). You’re still working for the same company, but now you are on an annual contract instead of an annual salary. You provide a profit and loss statement showing your income is consistent with how you claimed your tax returns last year. Bam! It makes sense right? Well, most lenders won’t talk to you unless you have 2 years tax returns.
  2. You have been in business for yourself for 5 years running a printer supply store. Last year you had to change the name of your company because of a shady partner that you had to break ties with. You still operate on the same premises. The only thing that changed is the name of your company. Some loan officers will say “Yeah, let’s do this,” just to find out a week before closing that their underwriter isn’t going to approve the loan because there is not a two year history of that business. But, come on, it’s common sense. You’re only going to be looked at from a common sense standpoint in a case like this if you’re working with a lender that offers portfolio loans.

An example that probably won’t fly:

  • You have been a plumber for 10 years. You decide to quit your job and open a pizza parlor. You decide 6 months into it that you want to buy your dream home on the lake. Sorry, it’s going to be impossible to make a determination of what your income is in that short period of time.

How do tax returns impact your mortgage approval? Here is my latest post on that.

 

 



When seeking a portfolio loan, keep these things in mind…check-37583_1280

These are loans that are funded in-house with your particular lender, taking risks the vast majority of lenders aren’t willing to take. You may be required to put 10% down or more. You may only be able to do this type of loan on a primary residence. Your rate might not be the same as what conventional rates are. You may get a chance to be told “Yup, you’re approved”, when everyone else is saying “no”!

I invite you to reach out to me.

portfolio mortgage lendersGet your questions answered. You will not be talking with an intern, or someone who just got their mortgage license. You’ll be talking with me directly.

We can’t help everyone, but we do make every effort to take a common sense approach to get self-employed borrowers approved if it makes sense.

pre approved home loan

 

6 Proven Ways to Close on Your Home Lightning Fast

“Dude, so do you think we could close next week?”
“Dude, no. You didn’t even send me your stuff yet.”

I know this might be a shocker for you, but lenders actually want to close your loan. In fact, if it doesn’t close then they have wasted countless hours and resources with nothing to show for. Just like Realtors. The thing is… we have to cover our ‘you-know-what’, and make sure the loan meets all the fun and amazing guidelines that have been put into place.

Here’s the kicker, there are ways to speed up the process and make EVERYONE look good. Want to know how? Awesome! you’ve come to the right place. 

First of all, let’s get one thing straight: It’s going to take about 30-40 days to get to the closing table. That doesn’t mean the clock starts ticking when you found the house on Zillow. That means once you have a fully executed purchase agreement, and you tell me the inspection came back with flying colors, then we get rolling and order the appraisal. Is there such thing as closing quicker than 30 days? Of course. And if you use these techniques below, I promise you’ll be setting yourself up for success.

  • Get your crap together. If your lender has given you a list of stuff that is needed, take an extra 5 minutes to make sure you’ve gotten everything requested. An extra 5 minutes of making sure you included all pages on tax returns and bank statements will save you a couple necessary trips to the fax machine, and possibly a week of being in process. Click here for the list that is detailed and fool-proof.
  • Order inspection as soon as you have an accepted offer. This should be your next phone call after getting the good news that the offer was accepted. Many times your Realtor or lender will have a recommendation as to who should complete the inspection. You want to make sure the home is in reasonable condition, but you don’t want to waste money on an appraisal if the inspection comes back with more than you’re willing to take on. So it’s important to get the inspection done ASAP so you can move onto the appraisal, and get rolling.
  • Be fricken honest. Don’t withhold information from your lender thinking that will reduce bumps in the road. I promise, it will only make things worse. If you communicate something that you think might be a problem, your loan officer will now can be proactively working on a solution for you. The last thing you want is for us to find out something last-minute, and scramble to meet the contract date.
  • Answer your phone. Or at least respond to emails/texts. I know this one seems obvious, but dropping the ball on communication can not happen. Everyone needs to be in the loop as much as possible to simplify the process and maximize efficiency.
  • Get your homeowners insurance in-line. I can’t tell you how many times “the last thing” we’re waiting on is a declarations page from the homeowners insurance company. Not because the company is slow, but because the borrower waited till 48 hours before closing to get a quote. Once you have the appraisal, give your insurance guy a call to put together a policy.
  • Stay in town. Or at least have the means to easily communicate while you’re gone. Buying a home is obviously a big commitment, which involves a lot of moving parts. If someone falls off the map, everything in the process can come to a screeching halt, causing major delays. But if you are leaving, give all parties a heads up, and double-check to see if there is anything that is needed from you.
I can tell you with absolute certainty, if you keep these things in mind when you’re buying a home things will go much smoother for you. 

 

There are so many factors that can create challenges to overcome. Some are fixable, some aren’t. If you let a little bit of your OCD side come out and play, it will work wonders in terms of detail and promptness.

What bumps in the road have you experienced recently that caused a seemingly unnecessary delay?

Zero Down Mortgage – USDA Home Loans

RD loan

Zero Down Mortgage

Did you know that even if you’re not a veteran you can buy a home with a zero down mortgage in many areas? And it’s not too good to be true. There are, however, some restrictions regarding location and income.

The United States Department of Agriculture (USDA) Rural Development guaranteed loan usdalogoprogram is a government loan designed to help low-moderate income earners purchase a home in “rural” areas. However, you may be surprised to see what the government considers to be rural and low-moderate income.

Income

The income restrictions will vary across the country and even across each state. Here is an example for my local market in Livingston County, Michigan. For a guaranteed RD loan the annual household income must be at $93,450 or below. Even if the spouse is not a borrower on the loan, their income will be used as a factor in the household income. USDA looks at the whole picture, not just the applicant. You can use this tool to help you get an idea if your family qualifies for an RD loan in regards to income. Remember when using that tool, you’re looking for qualifying on the guaranteed loan, which will maximize your buying power from in income standpoint.

Location

Many folks are shocked when they take a look to see that their neighborhood is in an area that is considered to be a “rural area” which allows them to get a zero down mortgage. Just outside the metro Detroit area and not far from many major cities Rural Development financing is available. Although the mapping tool on the USDA website is not 100% accurate, you can use this tool to give you an idea of what areas are eligible. You may be pleasantly surprised to find that you don’t have be living “out in the sticks” to be eligible for Rural Development financing.

What is also exciting about RD loans is that you can buy a condo with this program as long as it’s within the eligible geographic limits. Crazy right? Some people call RD loans “farm loans” and you can buy a condo with them. How awesome is that?!

What to Expect

  • Make sure you have your ducks in a row in respect to credit. You don’t need to have perfect credit, but it needs to be reasonable.
  • The process may take a little bit longer than other loans because it needs to get final approval by USDA after the lender approves it. However, right now in my particular market in Michigan, the RD turn time is 2-3 days. So not a significant delay currently.
  • Mortgage insurance is significantly less than FHA on a monthly basis, about 1/3 of what it costs on FHA.

There are so many expenses to consider when buying a home. So if you have an opportunity to buy with a zero down mortgage, and you qualify, why not take advantage of that opportunity?

Watch Video:

6 Reasons Homeowners are Happier People

Happiness thru Homeownership

6 Reasons Owning a Home Will Make You a Happier Person

The economy is getting better. Mortgage rates are still low. Home prices are still fantastic in many areas. But those are just market conditions. Let’s put those aside for now. Instead let’s take a look at why acquiring your piece of the American dream will make you a better person. Below are the reasons you’ll be happier as a result of being a homeowner.

1. Impressing the opposite sex. Chicks dig a guy that can buy his own home. Being a high quality partner in the eyes of our mate is something we all strive for. We are happier when we feel a genuine connection with the person we want to impress. What better way to prove you’re a keeper by showing you have the ambition to be a homeowner? It’s proven that 87.3% of women would be more likely to go on a 2nd date with a guy that owns a home versus a renter (yes, I just made that up, but I’m sure it’s close). Not only that, but your relationship can become more dynamic when you’re not sharing a paper thin wall with “Old Man Smokie” in the apartment unit next door.

2. You will have better credit. Having good credit gives you flexibility, and a feeling of accomplishment. Having bad credit can lead to frustration, and a feeling of being inadequate. When you own a home or are preparing to buy a home you tend to take better care of your credit. What’s the worst that can happen when you’re late on a rent payment? Maybe a late fee coupled with a cold shoulder from your land lord. Big deal? Not really. What’s the worst that can happen if you’re late on your mortgage payment? Credit score drops, and you get denied for financing on that car you promised your daughter for her graduation gift. Pretty serious. So as a result, you’re more inclined to be on top of your finances, and keep things in order as a homeowner. The responsibility of carrying that mortgage naturally motivates you to grow, and become more of a well rounded individual.

3. You can have whatever kind of dog you want. Man’s best friend. When you come home after a long day of work, there they are. Wagging with delightful appreciation. Telling you “Welcome home my friend. I missed you so much. You are an awesome person!” Happiness on four legs. If you’re renting you will be limited to your housing options depending on what kind of dog you have. Don’t believe me? Pull up craigslist, and search “pet friendly” in the rent section. You’ll find a handful of listings. Usually homes that allow dogs up to 20 lbs. Yeah, good luck with that. However, if you buy your own home, you can get the English Mastiff from The Sandlot if you so desire. Restrictions may apply in condominiums, and neighborhoods with strict homeowners association policy.

4.Gets you closer to retirement. If you play your cards right you can feel much more comfortable when it’s time to retire. The vast majority of people don’t stay in a home for 30 years and pay off their original mortgage. But if you are disciplined enough, you can time it out so that you don’t have a housing payment in your golden years. Here is a realistic example: Buy a house at 28. Sell home and upgrade to nicer home at 33, with room for the family to grow. At 38 refinance the home to finish the basement, and do needed upgrades. While raising kids you’ll probably want to keep the payment low and stay on track with a new 25 year mortgage since you’re already 5 years into the mortgage. After the kids graduate college you’ll be an empty-nester at 55. No more college expense allows for higher mortgage payment. With only 8 years left on the mortgage, you put an extra few hundred dollars per month toward the mortgage, and pay it off in 5 years. At age 60 you’re ready to retire with no mortgage payment.                         

5. Better problem solver. Owning a home inspires you to think and fend for yourself. There isn’t some maintenance phone number you can call to have someone come out to fix a leaky faucet. You have to figure it out. Again, this forces you to put on your thinking cap and do things you wouldn’t normally do. When you are put into that position you’ll be surprised on how creative you can actually be. Yes, there may be a considerable amount of swearing involved. Yes, there may be several wasted trips to Lowes. But when you complete a task that you’ve never done before, you become more comfortable taking on bigger challenges.

6. Stronger sense of self worth. Have you ever gone to a friend or family member’s house within the first few months of them buying it? Their whole demeanor is shifted from before they bought their home. There is something special that happens when it actually hits you. When the “I can’t believe it’s really mine” feeling enters your mind, it’s a moment of fulfillment. You think back on all that you have done to get to that point of getting the keys to your front door. The time you spent perfecting your resume to get the job you needed. The months or years it took to save for down payment. The attention to detail it took to pay all your bills on time to have good credit to qualify. It’s a real confidence builder when all the pieces of the puzzle come together.

Are there new challenges and frustration that are involved when owning a home? Of course. But that’s the beauty of it. You learn so much, your patience is tested, and you grow as a result of it all.


Do I Really Need a Realtor? LOL

Is a Realtor Necessary in this Market?

It’s 2014 for goodness’ sake! With so many mobile apps and websites, you literally have the world in the palm of your hand. Is it really necessary to use a Realtor when buying or selling a home? The answer is Yes! I’ve had the pleasure of working with Livingston County, MI expert, Wendy Hoover. Wendy was able to give me some feedback as to why having a Realtor in your corner is more important than ever.

Why do you need a Realtor?

The home buying process should be fun and exciting and is also one of the biggest financial investments you will make. It is important to have someone on your side to help you navigate through all of the ins and outs of finding your perfect home. It’s all about you…your needs, your dreams, your goals, your questions and your concerns. It’s important to chose a Realtor that you are comfortable with and who has your best interests in mind.

A good real estate agent will save you time, money and headaches. We guide you through the home buying process from start to finish. The first step is to talk to your lender to determine what type of financing would be best for your individual situation, and get pre-approved. In this market, good homes go fast so it is critical to have a pre-approval letter to submit with any offers you make. Most sellers won’t even look at your offer without knowing that you are a qualified purchaser.

The next step is to analyze your needs, search listings, and view properties. Your Realtor will have access to listings as soon as they come on the market, and will be able to guide you towards listings that will work for you and your financing so that you aren’t wasting time.

When you do find a home and are considering making an offer, your Realtor can research homes that have recently sold in the same area and are comparable to the home that you want to put an offer on. This will help you make an educated decision based on current market value. We will also counsel you on market conditions and trends so that you have the best chance of getting your offer accepted.

Your Realtor will negotiate the terms of the contract, coordinate inspections, resolve issues and work with the title company and lender on your behalf to ensure a smooth closing.

It really is a team effort, and there are many pieces to the puzzle. Whether you are a first time buyer or you are well seasoned in the real estate market, it always pays to have a good team on your side. To start searching for homes today, please feel free to visit my website or call me at 810-534-2026.