People looking for Ann Arbor Real Estate should be up on the latest developments in the mortgage industry.  I know, things change almost constantly but this is why you must establish a good working relationship with a Bank or Savings and Loan mortgage representative.  Mortgage Brokers (people who take your application and then look for a lender to loan you the money) can be good too, but not necessarily.  A great deal of the blame concerning the sub prime mortgage crisis of the past few years unfortunately falls on brokers.  Use a broker if you can find one who you are sure you can trust to do the right thing for you.  Your circumstances should dictate the loan parameters, not the commission the rep is going to collect from any particular loan they sell.  For every home buyer who was caught in the mortgage crisis, there is a matching loan rep who thought only about pocketing his/her commission.  Never ever use an Internet Lender.  If you cannot make an appointment and sit down across the desk from you representative, find someone else.  Also don't forget to ask for a Good Faith Estimate of the loan costs, in writing.  The cost of the loan is only a portion of the money you will have to raise to purchase a home.  In addition to the down-payment there are tax prorations that you pay to compensate the seller for the taxes that were paid in advance.  You will also be required to purchase mortgage insurance for the lender and pay a closing fee to the institution who prepares and closes the transaction. 

What about the $8,000 tax credit for first time buyers?  Well to start with you don't have to be a first time buyer as long as you haven't owned a home for the past three years.  The amount of the credit is limited to 10% of the purchase price so if you are buying a home for $50,000 you can only get a $5,000 credit.  There was talk that you could "monetize" the credit in order to use it for downpayment but lenders have not really put that into practice, at least as of this date.  What it boils down to is that you apply the credit to your Federal Income Tax filing thus reducing your tax liability by the amount your home purchase earns.  (If you generally get a check back from the government you might want to change your withholding status to reduce the deductions.  The home purchase credit on top of your normal refund can be money that is better utilized than sitting in Uncle Sam's pocket.)

Do you know your credit score?  Your lender will and the trouble is that a credit score that used to qualify you for a home loan may no longer be sufficient because of the tighter requirements.  This is a good reason to plan ahead and do whatever you can to increase your score before you go out looking at homes.  As an Ann Arbor area real estate professional I can tell you that it is very disappointing when someone talks to a lender after they have found a home that they really want, only to find out they cannot have it.  Small things like how many department store credit cards you have or how often you were "just a few days late" on a credit card payment can negatively impact your score.  Be smart, be proactive. 

For additional information about the Mortgage Industry and related topics visit the Mortgage Bankers Association website at http://www.mbaa.org