Kris Wales - Macomb County MI real estate blog & homes for sale search site

HUD and FHA are currently running a program here in Michigan (and other states) in which you can purchase a home with a $1 down payment. That sure gets the phones ringing if you advertise "$1 down HUD homes!" but it certainly doesn't tell the whole story:

HUD requires $1000 earnest money deposit for a home priced at over $50,000, a $500 deposit for those less than $50,000. There is no getting around this - it is mandatory that a copy of this good faith deposit check (cashiers or certified funds!) is sent along with an accepted offer to purchase.

Did you bid higher than the FHA appraised amount on the home? If you did, and you are the winning bid, then you must pay the difference between FHA's appraised amount and the amount of your bid for the home. (This most often arises in multiple offer situations. Example: You bid $5000 higher on the home in order to be the winning bidder. If the appraised amount is less than your offer you have to pay the difference at closing in order to receive the loan)

At closing you will also be required to have a one year home owners insurance policy that has been pre-paid. Estimates here in the Metro Detroit area are anywhere from $400 to $1000 for a home up to $100,000 depending upon the type of coverage you want. Plan on having this money tucked aside in your bank account prior to bidding on a HUD home.

You will need much more than $1 to purchase a HUD home with an FHA mortgage. The program is simply a way for a home buyer to not have to pay the 3 1/2% down payment that is normally required by FHA. It does not mean that you won't have out of pocket expenses. Please don't let the small print fool you and plan accordingly: Have some money in the bank when you are ready to start looking for your new home.

If you are thinking of purchasing a HUD home in Macomb County MI please talk to your buyers agent about what to expect for out of pocket costs prior to beginning your search for the HUD home.


Kris Wales - Macomb County MI real estate
Search Macomb County MI homes for sale
Chat about Macomb County MI real estate blog

I don't know if everyone is aware of it or not, but there are big changes coming to the way FHA will insure condos as of October 1st.

After reading HUD mortgagee letter a couple of things stand out that I know will affect my Macomb County MI condo buyers, and they may or may not affect your local condo buyers:





**"... the lender must avoid or mitigate the following conditions before completing its review process..:


1. The project is located in a Special Flood Hazard Area designated on a Federal Emergency Management Agency flood map.

2. Potential noise issues, where the property is located within 1000 feet of a highway, freeway, or heavily traveled road, within 3000 feet of a railroad, or within one mile of an airport or five miles of a military airfield."

Oh my. Talk about throwing a monkey wrench in to condo buying (and selling a condo!) You can't move a military base or an airport, and you surely can't move a whole condo complex. In my area we have Selfridge ANG (photo above) as well as DTW (Detroit Metropolitan Airport).

We have hundreds if not thousands of miles of heavily traveled roads.

As Michigan is the Great Lakes State we also have many areas within the FEMA designated flood plains.

The months after October 1st are going to be very interesting as the mortgage lenders and buyers agents try to figure out which condo complexes will pass FHA muster and how to help our buyers purchase a condo with financing other than FHA.

We may want to sit down with our mortgage lenders prior to the end of September to go over other options for our home buyers.



**Quote courtesy of HUD from their Mortgagee Letter 2009-19**


Kris Wales - Macomb County MI real estate
Search Macomb County MI homes for sale
Chat about Macomb County MI real estate

Most first time home buyers know that the process to purchasing their first homes start with talking to a mortgage lender, and then choosing a buyers agent. However, I feel that the most important part of the process isn't often talked about: Creating a budget that is comfortable.

One of the things that I suggest to my local Macomb County MI 1st time home buyers is to sit down with a notebook and write down the expenses that they feel they will have in a new home that they don't have now:

Once you're comfortable with your projected budget you can begin to live with that budget before you purchase a home. Try that budget on for size so to speak for a few months to see if it really is comfortable for you. Take that added money and put it away and pretend it isn't there. (It won't be when you've purchased the home and moved in to it!)

Along with the knowledge that "I can do this!" you'll also have more money tucked away to use towards the purchase of your new home if you've tried out your budget for a few months.


Try on those bigger shoes to see if they'll fit!



Kris Wales - A Macomb County MI real estate agent




Photo courtesy of:

I recently had the pleasure of working with a first time home buyer in Macomb County as she realized her dream of becoming a home owner. Nicole found me via my blogging and contacted me when she was ready to start the home buying process. She was also on the ball in regards to the first time home buyers tax credit, and knew she didn't want to wait to miss out on it. Armed with knowledge about this tax credit as well as the advantages of using an FHA 203K streamline mortgage, we set out to find her the home of her dreams.

Nicole was pre-approved for her FHA 203K streamline mortgage prior to our going out and looking at homes. She knew exactly where her comfortable payment amount was, and we based our home searches on that comfort zone. We also kept in mind the property taxes varying because of non-homestead reversals on some homes and adjusted the homes to see accordingly. During the last couple of months Nicole did everything that one could expect from a first time home buyer, and then some:

Viewed homes to narrow down those that would work out well with the FHA 203K streamline loan (no major structural work needed).

Chose a home based upon her needs and wants and keeping in mind the cost of the updates to not exceed what we felt would be the "after repairs" estimate of value by an appraisor.

Hired a home inspector for a thorough inspection of the home. Had a 2nd inspection - EPA lab testing performed on vermiculite found in the attic. (No asbestos was found, client was happy and could proceed.)

Chose a contractor to perform the repairs & updates. Contractor wrote quotes specifically detailing parts and labor costs and filled out the necessary forms required by FHA.

Worked out a sidewalk replacement assessment by the city building department to have the necessary money placed in escrow at the title company until the final bill comes in to the current homeowner.

FHA appraisal performed with 2 separate values given: "As is" condition market value and the market value after the repairs & updates.

Performed one repair deemed necessary by the appraisor
(scrape and paint a garage window) rather than add that to the contractors work list.

Whole package (appraisal, homeowners insurance, latest paystubs and bank statement) turned in to underwriting.

5 business days later the "clear to close" was given by the mortgage lender and the appointment with the title company to close on the mortgage was made.

** It was 45 days from the time the offer to purchase was accepted by the home owners to the closing on Nicoles home .If you are planning on taking advantage of the 1st time home buyers tax credit don't dawdle! Time IS running out!**

Last Thursday, the 30th of July, Nicole became a home owner for the first time. All of her hard work, research and patience paid off for her. She now has a home to call her own and with a mortgage payment that is much less than apartment rent.

She also will be amending her 2008 income tax return so that she can receive her 1st time home buyers tax credit this year, instead of waiting until she files her return next year.

**I'm so proud of this young lady**

Kris Wales - A partner for your real estate needs in Macomb County MI

Search Macomb County MI homes for sale Want to chat about Macomb County MI real estate?

Macomb Township MI has 2 of the most beautiful and state of the art municipal buildings for its residents. These buildings for Macomb Township are located south off 25 Mile Road on Broughton Road. (Approximately 1/2 mile east of Romeo Plank)

The main municipal building houses the following departments: Assessing, building, planning & zoning, treasurer, and other official township business. If you have recently purchased a new home on Macomb Township you will be visiting the municipal office to turn in your Homestead Exemption form as well as your Property Tax Affadivit. It would be worth your time while you are there to go across the street to the Parks and Recreation Department and tour it.

The Parks & Recreation building is the finest I have seen in Macomb County. This 57,000 square foot building has 2 pools (with a water slide and a lazy river) along with a basketball court, fitness center, running track and more activities for all Macomb Township residents to enjoy. Monthly memberships and daily passes are available. For a list of Frequently Asked Questions about the parks and recreation offerings please click here.

Kris Wales - A partner for your real estate needs in Macomb County MI

Search Macomb County MI homes for sale Chat about Macomb County MI real estate