MSHDA GRANT GOOD NEWS FOR FIRST TIME HOME BUYERS WHILE IT LASTS

We have an important announcement to share with potential first time home buyers in Grand Rapids! The Michigan State Housing Development Authority (MSHDA) is offering a $3000-$5000 grant as an incentive for any first time homeowner in Michigan.

Active military members and veterans are eligible for a $5000 grant, and non-military buyers are eligible for a $3000 grant, just for purchasing a new home.

The program has been underway since early December, and there is a limited amount of grant funding available, so it’s important to act quickly to get in on the program. The total amount of grant funds available is $15 million, which should assist an estimated 3000-5000 first time home buyers.

For the purposes of the grant, a first time homeowner is anyone who has not owned their own home within the past three years, so even some buyers who have previously owned a home can qualify. The grant can be used for owner-occupied single family homes or condominiums.

Details about MSHDA’s Homebuyer Assistance Grant Program include:

• The grant must be less than 25% of the home price. In other words, a military person must be buying a home priced at greater than $20,000, and a non-military person must be buying a home priced more than $12,000.

• There is no maximum sales price limit.

• There is no income requirement to qualify for the grant.

• No repayment is required.

• A buyer must use a licensed Michigan mortgage lender. The grant is not available for a cash sale or land contract.

• The grant can also be combined with another MSHDA program, the Down Payment Assistance Program, if the buyer qualifies for that as well.

To apply for the program, a home buyer needs to notify their lender that they would like to apply for the National Mortgage Settlement grant monies, and the lender will verify the status of the grant program funds and file the application. The lender must file the application after the loan has been approved and the closing date has been scheduled, but at least 6 days before closing.

Now is a great time to be a first time home buyer in Michigan. If you are a potential first time home buyer, contact your real estate professionals at The Gordon Group to help you achieve home ownership.

Call Michelle Gordon at 616-426-9969, or email michellegordon@grar.com, to move towards home ownership while you can take advantage of this great program!

If you think this tax may apply to you please download our free E-Guide "10 Things You Need to Know About the 3.8% Tax"

If it is your thing, we have collected the game schedule for you here as a quick reference guide.

Feel free to download this 2012 Detroit Lions Schedule to print and share with your family.

LLCs are very flexible enterprises blending elements of a partnership and a corporation.

• An LLC is similar to a corporation in one important way: both allow limited liability for the owner(s) for the actions and debts of the LLC.
• An LLC is similar to a sole proprietorship or a partnership in a different way: both allow “pass through income taxation,” meaning that you can choose to be taxed as a sole proprietorship rather than a corporation (which is essentially taxed twice).

Protecting your personal assets from liability is one main reason for creating an LLC for your second home or condo. As we mentioned in our previous post, “Why Own Houses and Property in an LLC,” if you create an LLC for your property, you can shield your personal assets in case anyone brings a lawsuit related to accidental injury, contractual disputes, and such. In most cases, if your second home is owned by an LLC, your risk is limited to the assets of the LLC. Again, be sure to consult with your legal professional for the details. We recommend Amber Soler from Soler Law, PLLC; you can email her to learn more: ambersoler@solerlawpllc.com

Another main reason for putting a second home in an LLC would be for estate planning purposes. In Michigan, a “Cottage LLC” can be set up to outline how the family vacation home will stay in the family. Of course a will or a trust can be used for a second home as well (see our previous post “Putting Your Grand Rapids Home in Trust: How and Why”), but a Cottage LLC can be more effectively leveraged to prevent issues that can crop up among heirs related to management, maintenance, and usage of vacation properties. If an LLC is created, it should also include an operating agreement to establish details of how the property will be used. A Cottage LLC can ensure that the home can be used by the family for years to come, regardless of future events such as divorces, inability of an heir to pay their share of upkeep, heirs who elect to liquidate their share, and other eventualities.

Holding a home in an LLC can affect financing, so if you are purchasing a second home and will be using a lender, it is best to consult the lender before setting up an LLC. Some longer term financing options may not be available for LLCs, and you may only be able to lock in interest rates for 3 to 5 years at a time.

Again, we always recommend seeking professional advice when you decide the best way to manage your second home. It would be prudent to consult a lender (if needed), a tax accountant, and a lawyer, if you are weighing the advantages of setting up an LLC for your second home in Michigan. And if you are searching for a great second home in the Grand Rapids area, please contact us at The Gordon Group, and we will gladly work with you to pursue your leisure time dreams.

Forbes Magazine has named Grand Rapids, Michigan as the best city in America to raise a family. Read all of the details here.

Due to the growing number of scams, Congress asked NeighborWorks America to launch a national public education program; the campaign empowers homeowners to protect themselves against loan modification scams, to find trusted help and to report illegal activity to authorities.

Because loan scams continue to occur, MSHDA is sharing the information presented on this PDF. The Gordon Group thought this was important info to share with everyone.

Please download the PDF attached and read it.  Send it to any friends, family, or coworkers who are also homeowners so that they can be informed, as well.

Not all Lenders are Equal, Closing Cost Danger!

During a recent interview with Jason Jenkins from First Place Financial in Grand Rapids, Michigan I was reminded of the gaping differences in lender costs. Jason really re-enforced the fact that lenders are not all created equal, nor are closing costs or pre paid fees.

When you are securing financing to purchase a home, not only will you want to consider the type of service you will be getting from your lender, you will also want to get very specific about closing and pre paid costs.

Many people think that closing and pre paid costs will be covered by the sellers without realizing that this is almost always capped to a percentage of the purchase price. This cap can vary depending on the loan type.

For example, FHA currently allows the seller to pay up to 6% of the loan value in closing costs. However, this can change at any time and there have been regular discussions that this will reduce to 3% in the future.

Allowing even less seller paid expenses are conventional mortgages. These loans only allow sellers to pay 3% of the loan value in closing costs.

Crunching these numbers, one will quickly come to realize that if buying a 50,000 home, 6% of seller paid closing costs may not cover all of the costs, much less at 3% with a conventional loan.

To help buyers get a general idea of costs involved with closing their mortgage we have included a basic estimate loan cost checklist below this post. Again, this is just an estimate; costs vary by time, lender, and loan type.

In addition to asking your lender about the items listed below, be sure to ask about any additional fees. When you have found a home you would like to put an offer on, a Good Faith estimate is in order to make sure you are able to cover all your cost for that particular home.

Jason's Estimated Closing Costs:

$350 Appraisal- for evaluation of value
$650 Processing/underwriting Fee- Charge for bank to process loan approval
$35 Credit Report- Run to determine credit worthiness for approval
$200 Title Company Closing Fee- Charged by title company to close loan
$580 Title insurance- This fee varies based on loan amount and insures against liens
$11 Flood Certification to verify home not in flood zone
$59 Recording fee- Records mortgage with municipality in which home is purchased

$1885 Total

Not included is Broker Fee and home inspections. Home inspections are the client's option while Broker fees are normally mandatory. To help our clients save money at closing, The Gordon Group does not charge a Broker Fee even though this does come out of the commission we earn on the sale of the home.

These costs are not all the same; when interviewing Real Estate agents ask what they charge.

"Pre-paids" are based on the annual property taxes for the home and the homeowners insurance secured by the borrower. We currently collect the following for escrow account set up

9 Months of the Summer Bill
3 Months of the Winter Bill
2 Months of the Homeowners insurance.

Optional pre-paids

Home inspections: Price varies per inspector and depends on what you decide to have inspected. Generally inspections start at  $250.00.  Although an inspection is optional, I highly recommend having this done.

Most home inspectors will want to be paid at time of service.

Home Warranty - Price varies depending on the one you select - these usually start at about 395.00

For borrowers the guidelines are ; the borrow must complete a homebuyer education class, the minimum borrower contribution must be at minimum 1% of the sales price, and the sales price can be no higher than $224,500. In addition, this assistance is available to low-moderate income buyers and the household income limits depends on the location and family size.  
 
Here are some important points you should know...

The loan is non-amortizing with zero interest and no monthly payments.
The maximum amount of assistance that can be received is $7,500.
This is available with the MSHDA's FHA or Rural development first mortgage.
The funds may be used for closing costs, a down payment, prepaid/escrow costs, and an inspection done by a qualified home inspector.
Upon the sale or transfer of the property or if the first mortgage is paid in full/refinanced, the loan is due.

If you fit these guidelines mentioned above and could use some assistance in buying a home, then be sure to consider this program. For more information, visit the Michigan State Housing Development Authority: http://www.michigan.gov/mshda.

Michelle Gordon is a Realtor with Keller Williams Realty - Grand Rapids Michigan - voted the best Real Estate company by readers poll 2009 - 2010 in the Grand Rapids Magizine.  Focus on 1st time home buyers, Relocation and listings in the Kent County area. You may find Michelle on facebook, twitter or linked in and she invites you to join her.