Archive for January, 2009

Impound Accounts for Troy Michigan Real Estate

Posted in Troy Michigan Real Estate by Michigan Real Estate Expert on January 29th, 2009

When buying Troy Michigan real estate in southeast Michigan, you may come across the option to set up an impound account.  If you don’t know what it is, you could end up passing on a good thing.

An impound account is also known as an escrow account.  The mortgage lender sets up a separate savings account to pay the taxes and insurance you owe on your Troy Michigan real estate.  Each month, you pay the lender 1/12 of the total amount due for the year, along with your regular principal and interest payment.  The total payment is known as your PITI – your principal, interest, taxes and insurance payment.

For instance, let’s say your property taxes are $2400 a year and your homeowner’s insurance is $600.  You would pay the lender $250 a month, instead of having to pay in one lump sum.

Impound accounts can be set up at the same time as your mortgage loan, but the initial sum will be larger than what you’ll pay on a monthly basis.  You’ll have to pay a few months and the insurance premium up front.  The overage amount is used as a reserve in the case of shortages; as much as eight months reserve could be required.

There are several reasons that a shortage can happen:

  • Your property taxes increase and you need to make up the difference
  • Your insurance policy coverage can change, raising the cost
  • Your lender didn’t calculate the initial cost correctly

This means that you won’t have paid enough money into the impound account (or escrow account) and the bills on your Troy Michigan real estate won’t be paid in full.

Account shortages will happen, no matter how careful you are, so it’s best to know your options before that happens.  You can look for less expensive insurance, pay the difference in cash, or agree to pay the increased amount.  You can also get less insurance coverage, but it isn’t recommended.

You can also set up your own impound account, but you have to be disciplined enough to do so or hire an accountant. If your loan is 80% more than the value of your Troy Michigan real estate, the lender may not let you set up an account.  You also have to pay any shortages in one lump sum if your taxes go up at the end of the year.

Do you have any questions about buying Troy Michigan real estate?  No matter how big or small your questions are, I’d be happy to answer them for you.  Just drop me an email at now or give me a call at 248-514-2640.

Lee Morof
RE/MAX Showcase Homes
Birmingham, Michigan
Call:  248-514-2640


Southeast Michigan Real Estate – Will You Need Private Mortgage Insurance?

Posted in Troy Michigan Real Estate by Michigan Real Estate Expert on January 26th, 2009

You may have heard the term Private Mortgage Insurance (PMI) when looking to finance Southeast Michigan real estate.  What is PMI, and how do you know when you need to purchase it?  The answer can be hard to find among all the real estate jargon you’re hearing lately.  Here is the short version of what you need to know about it:

What Is Private Mortgage Insurance? (PMI) 
PMI is an extra insurance required by some lenders to offset their risk of you defaulting on your home loan.  When you put down less than 20 percent of the real estate’s value, your lender may tell you that you have to buy PMI.  It is usually added into your monthly mortgage payment until the equity in your Southeast Michigan real estate reaches 20 percent.

Under the current law, the PMI will be canceled automatically at 22 percent equity, if you are current on your payments.  If you aren’t current, the lender does not have to cancel the insurance because the loan is high-risk.  After getting caught up on your payments, the PMI will be cancelled.  Any money that you have overpaid must be refunded to you within 45 days.

What If Your Southeast Michigan Real Estate Increases In Value?
With a conventional loan, it may take as many as 15 years of a 30-year loan to pay down 20 percent.  But, if property values in your area rise, you might be able to cancel the PMI sooner.

Some lenders may be willing to consider the new value of your home to determine the equity in your home.  You may be responsible for any fees like an appraisal that may occur.  You’ll have to weigh the costs of the appraisal against the savings of the PMI premium.  In most cases, you’ll find that the added expense is worth it. 

Private mortgage insurance is a good thing if you can’t afford to pay 20 percent of the cost of your real estate as down payment.

Are you a first-time home buyer?  Now is a great time to buy Southeast Michigan real estate. Call me today at 248-514-2640 or email to find out why.

Lee Morof
RE/MAX Showcase Homes
Birmingham, Michigan
Call:  248-514-2640


What Do Points Have to Do With Troy Michigan Real Estate?

Posted in Troy Michigan Real Estate by Michigan Real Estate Expert on January 22nd, 2009

You may have heard of points when looking for Troy Michigan real estate.  Maybe your loan officer told you that you can trade points for a better interest rate.  That sounds good, but just what are points? Let me give you a better idea of just what points are and how they work.

What Are Points?
Points, more specifically discount points, are a percentage of the total loan amount for the house that is pre-paid to the lender.  Each point is worth one percent.  Your lender may offer a lower interest rate for your mortgage loan if you buy discount points.

What do Discount Points Cost?
The cost of each point is equal to one percent of the loan amount. For instance, for a $200,000 loan one discount point equals $2,000.

For example, you are trying to buy Troy Michigan real estate worth $200,000.  The lender may tell you that if you buy 2 points at $2,000 each, you’ll get an interest rate two percent better. 

Should I Buy Discount Points?
Some lenders will allow you to purchase discount points to be approved for the loan.  By buying a discount point, you’ll get a lower interest rate.  This can reduce your monthly payments, which could put your credit to debt ratio in the right range.
You have to know how long you’ll live in the house or you could lose money purchasing the discount points.  If you sell or refinance before you reach the break even point, you’ll wind up with a net loss.  Use an online mortgage point calculator to help you determine if buying discount points is a money saving proposition for you.

Points may be a good way for you to save money on your Troy Michigan real estate if you plan to stay in your home for a long time.  Want one more benefit?  Discount points are tax deductible in the year in which they’re paid.

Need help understanding mortgage and real estate terms?  Subscribe to my blog now.  You’ll get easy to understand information like this sent straight to your email a couple of times a week.  And it’s free!

Are you ready to sell your southeast Michigan real estate?  I’d like to show you my 30-Day Marketing Plan that sells 85% of homes listed with me.

If you’re a buyer there are lots of good deals on Troy Michigan real estate and interest rates are low.  Give me a call at 248-514-2640 or contact me now

Lee Morof
RE/MAX Showcase Homes
Birmingham, Michigan
Call:  248-514-2640


Are You Ready To Own Troy Michigan Real Estate?

Posted in Troy Michigan Real Estate by Michigan Real Estate Expert on January 19th, 2009

You’ve finally decided you want to buy a piece of Troy Michigan real estate.  What do you do now?  Here are a few tips to get the best deal for your money:

Check Out Your Credit
The first thing you’ll want to do is order a copy of your credit report from the three major credit bureaus:  Experian, TransUnion, and Equifax.  Look for inaccuracies in:

  • Name
  • Address
  • Creditors
  • Late Payments
  • Delinquencies

After you’ve reviewed your credit report and know your credit score, you’re ready to make improvements to your report.  You can send a written “Notice of Correction” to the credit bureaus.  It can be up to 200 words.  If needed, you can explain why you fell behind on a particular debt, and every time a lender accesses the report, they’ll see your explanation.

It can take several months to for your credit score to go up.  However, it’s well worth the effort to get a better interest rate.  It can save you thousands when you’re ready to buy Troy Michigan real estate.

What’s Next?
Before you start looking at properties, it’s a good idea to get a pre-approval letter from a lender.  The lender will take into consideration your income and credit history.  Then they’ll determine what loan amount you can be approved for.

Most pre-approval letters list the maximum amount that you are approved for, not necessarily the amount you can afford.  Look carefully at your budget so that you don’t get too excited about the number and get into more house than you can afford.
A pre-approval letter will give you and your agent an idea of what houses to look at, and no time is wasted seeing properties that you can’t afford.  Prospective sellers may also give your bid more weight if you have a pre-approval letter.

Are you a first-time buyer?  You have just made a fabulous decision for your future.  There are tons of great buys in the Troy Michigan real estate market. I’m a real estate specialist in this community and would love to help you buy the home of your dreams.  Call me now at 248-514-2640 or drop me an email at today!

Lee Morof
RE/MAX Showcase Homes
Birmingham, Michigan  
Call:  248-514-2640


Getting Approval For A Short Sale Of Your Bloomfield Hills Real Estate

Posted in Michigan Foreclosures by Michigan Real Estate Expert on January 15th, 2009

If you are having trouble making the payments on your Bloomfield Hills real estate mortgage, you may be worried about foreclosure.  You don’t have to have foreclosure on your credit record for the next ten years.  Your lender may accept a deed-in-lieu and protect your credit rating, or you may be able to get the lender’s approval for a short sale of your property.
What Is A Short Sale?
A short sale refers to the lender accepting a discounted payoff amount, or accepting less money than due to satisfy the loan.  Not all lenders will agree to a short sale.  Here are some tips on how to get approved for a short sale.

Call Your Lender
Explain to your lender why you are unable to make the payments and why you should be allowed to have a short sale for your Bloomfield Hills real estate.  You may be asked to submit documentation of your financial difficulties, including bank statements and tax papers.

Send In Documentation
The lender may request that you send in proof of your income and assets. They’ll want to know if you have any money in a savings account or a money market account.  You’ll have to tell them if you have any stocks, bonds or any other real estate that could be liquidated to pay off your debt.

Once you have approval to hold a short sale, you’ll still need to submit more paperwork to the lender.  You can ask your real estate agent to fill out the preliminary net sheet that the lender requires.  This form will show what you expect to sell the house for and what the net profit will be after all loans are paid off.

After you find a buyer you’ll need to mail in a form showing the offer, and a copy of the listing agreement.  The lender still has the option to refuse to approve the sale if the terms don’t meet their requirements.

A short sale may be your ticket to avoiding foreclosure on your Bloomfield Hills real estate.

Ready to work with a professional Bloomfield Hills real estate agent?  One who is also a real estate lawyer and has the ability to guide you through the complicated process of a short sale?  Call me today at 248-514-2640 or email  now for more information!

Lee Morof
RE/MAX Showcase Homes
Birmingham, Michigan
Call:  248-514-2640


When Can You Buy Real Estate After Michigan Foreclosures?

Posted in Michigan Foreclosures by Michigan Real Estate Expert on January 12th, 2009

If you lost your real estate because of Michigan foreclosures, you probably haven’t given up on your dream, of owning a home.  You may be scared to try for financing – afraid you’ll be turned down and embarrassed in the process. 

There are few guidelines that lenders follow to determine when you’ll qualify for financing after foreclosure.  Arming yourself with this information will help you overcome your fears and qualify for a mortgage again.

Foreclosure With Extenuating Circumstances
Generally, lenders will take into consideration any extenuating circumstances surrounding Michigan foreclosures on your home.  Was there a death or illness that prevented you from earning money to pay your mortgage?  Did you have a job transfer that came with a steep pay cut?  Were you severely injured and temporarily disabled as a result?

You can add a memo to your credit report that explains any lapses in credit worthiness to potential lenders.  This report can be up to two hundred words and will be shown to all who look at your credit report.

Many lenders will shorten the waiting period for documented extenuating circumstances.  The customary waiting period after a foreclosure is at least seven years.  But with documentation, the waiting period can be shortened to as little as three years.

Deed-in-Lieu of Foreclosure and Short Sale
You may be wondering what the waiting period for financing is for deed-in-lieu of foreclosure or in the case of a short sale.  Fortunately lenders aren’t quite as strict if you were able to avoid an actual foreclosure sale.

The waiting period for a deed-in-lieu of foreclosure is four to seven years.  If there were special circumstances surrounding the deal, you may be able to qualify in as little as two years.  The lender may require a certain down payment or credit score as a condition of approval.

Getting financing after a short sale is the easiest.  Generally the lender will only require a two year waiting period before they’ll approve financing. 

The good news about financing after becoming one of the Michigan foreclosures is that it is possible.  Your dreams of owning Troy Michigan real estate don’t have to end because you’ve had a foreclosure in your past. You may just have to be a little more patient.

Whether you’re ready to buy your next home or simply have a question about southeast Michigan real estate, I’d love to help.  Give me a call today at 248-514-2640 or email me at

Lee Morof
RE/MAX Showcase Homes
Birmingham, Michigan
Call:  248-514-2640


Inspecting Michigan Foreclosures Before You Buy

Posted in Michigan Foreclosures by Michigan Real Estate Expert on January 7th, 2009

If you’ve been thinking about investing in one of the many Michigan foreclosures , there are lots of great bargains to be had.  However, make sure the home you buy doesn’t have major problems.  Before you spend the money on a professional home inspector, look at these common problem areas:

Usually, ceilings are made of plaster and plasterboard.  While looking at the ceilings, keep an eye out for these issues:

  • Cracks, holes or uneven areas
  • Dampness or mold growth
  • Crumbling areas
  • Cracked or bulging areas

In general, walls are made of bonding plaster or plasterboard.  You can look for the same problems as you would on ceilings, with the addition of a few more:

  • Loose skirting board
  • Soft, damp or rotten
  • Discolored decorations, blisters or other faults such as peeling wallpaper
  • Dangerous materials such as asbestos or gloss-painted polystyrene tiles.  Asbestos can be hard to identify; if you think you have asbestos, get professional help.

No matter what material the floor is made of in Michigan foreclosures, the structural supports are generally made of the same types of materials as other homes.  Here are a few things to look for:

  • Uneven flooring
  • Movement, cracking, lifting or dampness
  • Loose floor covering, such as raised boards or lifted tiles
  • Large gaps between floorboards
  • Cracked or missing tiles

The kitchen and the bathroom may hold most of the plumbing, but some will go through the rest of the house as well.  Look at the plumbing for:

  • Rust or leaks
  • Hammering or knocking pipes
  • Lead pipes
  • Improperly supported water tanks

Faulty or old wiring can be a major hazard in any potential home.  Although some wiring issues aren’t easy to spot, there are signs:

  • Rubber cables or single-flex wiring twisted together with exposed insulation
  • Blackened or failing power sockets
  • Brittle or bare wiring
  • Plugs that get hot when used

No home inspection should be considered finished until a licensed home inspector has come to the Michigan foreclosures that you’re interested in.  By using this guide, you’ll only have to call an inspector once – to get a clean bill of health on your new real estate.

Want to get a great buy on a foreclosed property in southeast Michigan?  I specialize in this area and would be happy to guide you through the process of purchasing a foreclosed property.  And, as a licensed real estate broker and lawyer, I can help you save money while keeping you from making a mistake that could cost you thousands of dollars.

Give me a call today at 248-514-2640 or email me at now!

Lee Morof
RE/MAX Showcase Homes
Birmingham, Michigan
Call:  248-514-2640


Should You Owner Finance Your Troy Michigan Real Estate?

Posted in Troy Michigan Real Estate by Michigan Real Estate Expert on January 5th, 2009

You’ve decided to sell your Troy Michigan real estate but you want to sell it quickly and for top dollar.  Have you considered providing owner financing, also known as seller financing?

Why Isn’t The Buyer Getting Bank Financing?
Usually a buyer gets bank financing when buying a home.  If the buyer approaches you with a deal that involves you doing the financing, you should ask why!  Maybe the buyer can’t afford a big down payment, and can’t be approved for a loan without it.  Or, they may not be able to get financing at all, due to no credit or poor credit.

In that case, you’ll want to evaluate if you can afford to take the risk of owner financing.  Can you make the monthly mortgage payment in the event they default? If you determine that the deal isn’t too risky, you can finance the home yourself for a greater profit.  But, there are some instances when you won’t be able to owner finance your Troy Michigan real estate home.  

When Can’t I Owner Finance My Home?
You may not know that in order to finance your home yourself, you have to be able to pay off your current mortgage in full prior to making the sale.  If you can’t afford to make the full payment, you won’t be able to owner finance the property.

If you already own the house outright, you’ll be able to finance the property.  You may decide to owner finance part of the sale price at a higher interest rate.  This would be an ideal situation for a buyer who can qualify for a bank loan for most of the sale price, but is unable to be approved for a higher loan amount to get the rest.

After a year of making payments to the bank, the buyer may be able to finance the remaining amount, and then you’ll receive a lump sum for that amount. 

What Else Do I Need to Know?
There are a lot of things to take into consideration before deciding if owner financing is right for you.  Be sure to do your homework and understand there are benefits and risks when you owner finance

It is also wise to consult with a real estate lawyer and a professional real estate agent.  As a licensed real estate broker and lawyer, I’m uniquely qualified to help you make this important decision….and I’ll keep you from making a costly mistake.

Listing your Troy Michigan real estate for sale and offering owner financing can sound like a daunting task.  Let me help you determine if owner financing will benefit you.  Call me now at 248-514-2640 or send me an email at right now!

Lee Morof
RE/MAX Showcase Homes
Birmingham, Michigan
Call:  248-514-2640


Thank You Birmingham For First Night

Posted in Southeast Michigan Real Estate by Michigan Real Estate Expert on January 2nd, 2009

Every New Years Eve, our family attends Birmingham’s First Night, an alcohol free event sponsored by The Cultural Council of Birmingham / Bloomfield. The evening features live entertainment and crafts geared toward families.








This year’s performances were well worthwhile. The magic by Jason Hudy featured a levitating illusion that wowed the crowd. Puppeteer Brad Lowe was first provided an explanation of how marionettes are made. He then performed a soundtracked show about a fisherman who caught a magic fish that he let go. When the fisherman’s wife learned about this, she nagged the fisherman to return to the fish and ask to have her wishes granted which, once granted, only led to more wishes.

This year’s, First Night also included a Steel Band, face painting, a model train exhibit, and crown making. Of course, there are so many options that you cannot do everything. If you want to have a safe and fun New Years Eve with your family, be sure to attend next year’s First Night event

If you’re thinking about buying or selling Southeast real estate, give me a call at 248-514-2640 or email  I’d love to help!

Have a fun and prosperous New Year! 

Lee Morof
RE/MAX Showcase Homes
Birmingham, Michigan
Call:  248-514-2640


Reverse Mortgages: Cashing in on Troy Michigan Real Estate

Posted in Troy Michigan Real Estate by Michigan Real Estate Expert on January 1st, 2009

Many older Americans who own Troy Michigan real estate are turning to reverse mortgages to convert part of the equity in their homes into cash.  With reverse mortgages, loans don’t have to be paid back to the lender until the homeowner dies, sells their home or no longer uses it as their principal residence. 

Three Types of Reverse Mortgages
There are three basic types of reverse mortgages: single purpose, federally insured, and proprietary.  For all three types, you need to be at least sixty-two years old and live in your home.  The proceeds are generally tax-free and many have no income guidelines.

  1. Single purpose – Generally, single purpose reverse mortgages have very low costs.  They’re offered by state and local government agencies, as well as nonprofit organizations.  As the name suggests, this type of reverse mortgage can only be used for one purpose, specified by the lender.  That purpose is usually for home repairs, home improvements or property taxes.  To qualify, your income has to be low or moderate.
  2. Federally insured – Also known as Home Equity Conversion Mortgages, or HECMs, federally insured reverse mortgages are backed by HUD.  They’re usually more costly than other loans, and the up-front costs can be high.  They’re more expensive if you stay in the home for just a short time, but they’re also widely available, have no income requirements and can be used for whatever purpose you want to use them for.
  3. Proprietary – Although backed by private companies, proprietary loans are much like HECMs.  The largest difference is that HECMs generally provide a larger loan advance with a lower total cost than proprietary loans.  However, those people whose homes have a higher real estate appraisal value might get a bigger loan advance from a proprietary reverse mortgage.

People may choose to take out reverse mortgages for home repairs or improvements, or because they need help paying property taxes.  Other reasons include paying for healthcare expenses, paying off a current mortgage, or supplementing retirement income.

Before taking out a mortgage of any type, remember to read the fine print.  Many people who own Troy Michigan real estate have lost their homes because they didn’t fully understand the terms.  If necessary, have a professional explain them to you.

Thinking of buying or selling Southeast Michigan real estate?  When you or your loved ones work with me as your Troy Michigan real estate professional, I’ll refer you to a mortgage loan expert who will help you select the best mortgage for your financial situation.  Call me today at 248-514-2640 or send me an email at now!

Lee Morof
RE/MAX Showcase Homes
Birmingham, Michigan
Call:  248-514-2640