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Real Estate Appraisals and Your Mortgage: An Interview with Sean Landis of Grand Oak Mortgage

By Sean Landis

Tell us a little about your company.

Grand Oak Mortgage Company is privately owned. We opened for business in October 1986 and remain a small family operation located in Grand Blanc, MI. We specialize in Mortgage Residential Lending. We are a licensed Mortgage Broker in the State of Michigan. We assist borrower's looking to refinance their current home or purchase a new home.

Grand Oak Mortgage specializes in finding the perfect loan program to fit the individual needs of our borrowers. We get a majority of our business from past client referrals and realtor referral business. We offer our clients competitive closing costs and shop the market to offer the lowest interest rates possible. Personal attention, excellent communication and a reputation for honesty have kept us in business for 28 years.

What services does your company provide?

We offer a full menu of loan products; Conventional, FHA, VA and RD. We have programs for First Time Home Buyer's and assist "Trade Up" buyer's in the purchase of their dream home. We offer programs with 0% down payment with up to 6% seller concessions. The traditional FHA program requires 3.5% down payment and Conventional lending requires 5% down. We offer loan programs with credit scores as low as 580 on all Government financing programs.

We offer the Fannie Mae and Freddie Mac Home Affordable Refinance Program (HARP) program for borrowers who may be upside down on their mortgage. This program will allow homeowners to lower their current interest rate and monthly payment, even if they don't have equity in their home. We can assist homeowners complete a "cash out" refinance to consolidate debt or with a complete a home improvement.

What factors can influence a mortgage?

Since the mortgage meltdown, the lending world has "tightened" the underwriting guidelines quite a bit. Credit history and scores are the most important factor in determining, if you can get approved for a mortgage. Most programs today require a 620 credit score or higher.

The amount of monthly debt you carry will determine how much of a mortgage you can get approved for. Lenders will review your current revolving and installment debt. Your monthly income is then determined. A formula is used to determine how much you can afford monthly for a house payment, including taxes and insurance. Your current debt and new mortgage payment can't exceed 45% of your current monthly income.

Your funds available to close will determine which loan program or programs you are eligible for. In addition to the down payment, borrowers will need funds at closing to cover third party closing costs, such as appraisal, credit report, title insurance, recording fees, etc. Funds will be needed at closing to set up an escrow account for property taxes and home owners insurance.

If you have had a prior Bankruptcy or Foreclosure, you will have to wait a period of time before you can get a new mortgage. Positive compensating factors, such as time on the job, retirement assets and previous rent history will reduce the "risk profile" of a borrower.

How can a home appraisal influence a person's mortgage?

The appraisal is the most important piece of the puzzle in a refinance transaction. Simply put, if the home doesn't appraise high enough, you may not be able to borrow enough to pay off the existing mortgage. On a purchase transaction, the appraisal must equal the sales price or else the buyer and seller must renegotiate the sales price of the property.

Is it smart to get your home appraised prior to refinancing your home?

Yes, getting an appraisal is not only smart it is required on most Purchase and Refinance transactions. IN order for a lender to fully approve the loan, they need to access the equity position in the home. For example, the lending guidelines allow you to borrow up to 95% of a "rate and term" refinance. For a "cash out" refinance, you can only borrow 80% of the appraised value on a conventional loan. The cost of an appraisal ranges from $400-$500.

What is the best way to contact your company?

Grand Oak Mortgage Company has a website which is updated with new loan program and information weekly www.grandoak.com. You can email us at slandis@grandoak.com or call us at 810-695-5400 with any mortgage related questions.

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