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Jon Arnold Inlanta Mortgage

With over 12 years of experience in the mortgage industry Jonathan prides himself on taking the time with each and every client to evaluate not only what is best for them today, but also what will be best for their future. As the Grand Rapids Branch Manager Jonathan ensures that each client is confident in making their home ownership dreams a reality.

Jon Arnold

Jon Arnold

With over 12 years of experience in the mortgage industry Jonathan prides himself on taking the time with each and every client to evaluate not only what is best for them today, but also what will be best for their future. As the Grand Rapids Branch Manager Jonathan ensures that each client is confident in making their home ownership dreams a reality.
By Jonathan Arnold,
Branch Manager
Inlanta Grand Rapids, MI

 

 

As a direct mortgage lender dedicated to helping my real estate investment clients build wealth, I have a unique vantage of the counter-intuitive nature of credit scoring and reporting. Often, individuals with higher net worth don’t leverage their assets in a way that optimizes their credit scores.

For example, you’d think a client sitting on $400,000 in home equity, about to sell his house in this hot market and move to a condo in preparation for retirement, would be a underwriting dream. You’d think, if you were a logical person, that his careful management of his money would net him very best interest rates available.

Yet time and again, my team sees clients who have done “all the right things” but don’t get the benefits of the highest credit scores, which means they would leave money on the table by paying a higher interest rates.

Proactive intervention can save these people tens of thousands of dollars in interest over the life of a loan. So it’s important to talk to your mortgage lender the moment the notion to buy, sell or refinance occurs to you. With the right team in your corner, you can leverage your “right moves” to reflect in your score.

Reasons for Lower Scores in HNWIs

Let’s take my guy “Sam” for example. He’s a big Dave Ramsey fan, so he’s dutifully paid off his high-interest, revolving credit cards and closed most of the accounts. Plus he saved up to buy a used Ford F-150, cash. The one credit card he keeps open, he makes sure to pay off in full every month, no matter how high the balance.

In other words, he’s admirably managing himself and his assets by most accounts….unless you’re a lender looking at the weighted FICO score that adds up differently in the alternate universe of credit scores.

The Alternate Universe of Credit Scores

The difference in interest between someone with a “good” score of 700 and an “excellent” score above 760 can be hundreds of dollars a month in interest and thousands per year. There are actually different types of credit scores used for different scenarios, such as revolving credit, auto, and home loans.

For home loans, this is the weighted mix of the FICO score:

  • Payment History (35% of score)
  • Amounts Owed (30% of score)
  • Length of credit history (15% of score)
  • New Credit & Inquiries (10% of score)
  • Types of Credit (Mix) (10% of score)

By this standard, Sam doesn’t look as good as he is, at least on paper:

  1. Sam lost positive history and score weight by closing credit cards, which would have contributed to a low utilization percentage. For example, if you have a total of $20,000 credit available and used only $5,000, you’re at the desirable 25% utilization. Now that Sam is down to a single card with a $10,000 balance, a month where there’s $5,000 in charges, even if paid in full at the end of the month, might report as a 50% utilization – which negatively affects his utilization score, worth 35% of his overall report weight.
  2. By paying off the credit cards and not having a car loan or mortgage, Sam will not have the desirable mix of credit lines lenders prefer to see. He has also depleted his cash reserves by buying the truck. Mortgage lenders in some cases like to see 6 months worth of income in savings.
  3. Sam may also have left himself unable to buy a new condo until he sells his house unless he has other liquidity available. He will not be able to bid competitively on a condo without a solid pre-qualification letter, and if much of his income isn’t earned income, that can pose another set of challenges.

Sam’s Solutions & Considerations:

  1. Sam could reopen some of his revolving credit accounts and have small monthly payments be charged to them. He could distribute his credit card charges across different accounts, ensuring he does not exceed 30% utilization.
  2. Sam would be well-served to investigate a HELOC before listing his house for sale. He would then have the cash available to purchase a condo when he finds the right one.
  3. Sam would likely have substantially more money in his retirement fund in 15 years if he used a large share of his proceeds to aggressively contribute the maximum each year for the next several years, and mortgaged a higher amount (but not more than 80% to avoid mortgage insurance).

The Takeaway:

Cash may be king, but credit score is Queen when it comes to great rates. Proactive review of your credit score by a mortgage specialist is a great way to prepare to make a move, whether you’re trading up or right-sizing for retirement.

Everyone, not just young folks starting out, can benefit from these general credit tips, plus a well-vetted review when it’s time to make a move.

  • Consistency long-term is key to a great credit score
  • Everyone should check their credit annually:  annualcreditreport.com (FREE)
  • You must use credit to have credit
  • Keep old accounts open
  • Don’t request lower limits on open accounts
  • Keep credit pulls to a minimum

Don’t let “good habits” prevent you from qualifying for the best rates. Know the score on your Credit.

Please feel free to access our Free Guides on this and other topics to help investors at our website: http://www.michiganhomeloansolutions.com/guides

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By Jonathan Arnold
Manager, Inlanta Mortgage Grand Rapids
http://www.MichiganHomeLoanSolutions.com

You've heard the Grand Rapids Real Estate market is on fire. You've been scheming and dreaming to trade up to your dream home. Or maybe you're going the other direction, selling the empty nest at peak profitability for a more carefree condo lifestyle. Either way, spring 2017 is a great time to list your house in Michigan.

But before you start staging, cleaning out closets, or calling your real estate agent, have you thought about what's likely to happen the minute your house hits the market in this climate? The good news is, it will likely sell. The bad news is, it will likely sell -- immediately. Which means that finding -- and securing -- your dream home in a hot market becomes an exercise in stress-seeking behavior as you try to juggle finding just the right house, selling your existing house, and having somewhere to live in the middle.

It Doesn't Have To Be This Way

Savvy homeowners can save themselves time, trouble and possibly grief if they make just one call before listing their homes. That call is to the Inlanta Grand Rapids Mortgage Team to be connected with a lender partner to open a home equity loan before it's listed. Note: It must be before the house is listed!

Traditionally, people facing the financial juggling involved in selling and buying a home have chosen among bridge financing, borrowing against their 401Ks, or proactively getting a home equity loan before listing their homes on the market. While the best option will depend on your individual financial standing, the team at Inlanta feels that in the current market, the HELOC offers more advantages and flexibility than other solutions, allowing the homeowner to get the jump on the home they want before putting their existing home on the market.

Interest-Only HELOC - Home Equity Line of Credit

If the house is not yet listed you can probably get a home equity line of credit (HELOC). With a HELOC, you can draw the amount you need for the new house, subject to a maximum draw.   The advantages include typically competitive rates, flexible terms and even Interest-Only products. The key advantage to the HELOC is that it allows a homeowner to access the equity locked up in the existing home before it's on the market.

Bridge Financing - Too Reactive vs. Pro-Active

In the old days, "bridge financing" was the instrument commonly used to help homeowners buy another home while selling their existing home. However, in the current mortgage climate, a bridge loan isn't usually available unless you have a binding contract of sale on the old house. This also means that you can't start looking until conditions are met. The sale agreement is the lender's security. Bridge loans differ from traditional real estate financing. Interest rates are higher than a fixed-rate mortgage loan, and closing costs can be as high as mortgage loans. At the end of the day, if you rely on a bridge loan secured on a sale, you may miss opportunities when the right house comes along.

Do The Math on the 401K

Some pundits recommend borrowing against your 401K as a low-risk way to finance a new home before closing on your existing home. But this makes no sense when the stock market is giving stronger returns than the interest charged on home equity loans. Money pulled from the market creates exponential losses over time.

So if you're getting ready to enter the spring market, get a jump with a call to Inlanta for a referral to our partners who specialize in smart products like the interest-only HELOC. We'll help you map out the right amount to keep in reserve for commissions and closing, and get you started started on the happy trail to your dream home.

Contact us for information on our HELOC partners.

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Jonathan Arnold has been working in the mortgage industry since 2003. He prides himself on taking the time with each and every client to evaluate not only what is best for them today, but also what will be best for their future. As the Grand Rapids Branch Manager at Inlanta Mortgage, Jonathan ensures that each client is confident in making their homeownership dreams a reality.

Contact Jonathan at jonathanarnold@inlanta.com

or follow him on LinkedIn (www.linkedin.com/in/jonathanarnold1 )

Visit the Grand Rapids Inlanta website at: www.MichiganHomeLoanSolutions.com

Forest Hill Financial, Inlanta Mortgage and Securities America are separate entities

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I suppose there are a lot of lighter topics that one could talk about on the dawn of a new year, however in my line of work every year around this time I find myself providing counsel to individuals and couples that have decided to go their separate ways. Generally, it's not the holidays or the new year that actually done the relationship in. Although the stress of the holidays coupled with unwanted conversations over politics with in-laws that may have over stayed their welcome certainly doesn't help a struggling couple find their way. Typically, the relationship has been broken or been breaking for a long time leading up to these conversations.

It's never easy for someone to open up about personal matters such as this and quite frankly especially when there are children involved, it can be a very emotional conversation. I decided to lay out some of the biggest takeaways and advice that I could give to someone facing the breakdown of a relationship and the prospect of a divorce or separation.

1. Do not let the fear of the unknown prevent you from finding out what the state of your credit, finances and potential future options are. Knowledge is powerful, just knowing where things stand and what your options are will help alleviate some of your stress and fear.

2. If you are still in an amicable relationship and have yet to file a divorce, prior to filing it is highly, and I can't stress enough HIGHLY, recommended that you seek out a banker such as myself to lay out your potential paths. Once the divorce is filed there are a number of options that will no longer be available to you as far as home financing is concerned.

3. There is such a thing as a "win-win" when dealing with a divorce or separation. I know it can sound unlikely or seem impossible, but I've worked with numerous couples who as a result of an earnest effort on both sides, were able to find housing solutions that provided stability for the children and peace of mind for themselves.

4. Find a compassionate banker who is objective and excels at communication. This is such a touchy subject and charged with so many emotions. The last thing many people want to deal with when going through a separation is their finances. It takes a patient ear, an open heart and a lot of experience to be able to successfully guide someone through this tough time in their life. Choose your mortgage banker wisely!

5. The solution may surprise you and be something that you did not expect. Throughout the years ofworking with couples going through separations and divorces I have witnessed, structured and been a part of some very unconventional outside of the box solutions. The biggest thing that I can recommend is just having the conversation with someone who is knowledgeable and experienced in dealing with these types of situations.

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Tis the season for giving thanks, for pulling our loved ones close to us and letting them know how much we appreciate and love them, for being charitable and spreading joy and good favor to those less fortunate and in need. For a lot of you out there (if you're anything like me) this is a time for reflection; this is a time to look back at the prior year and often during this time, I think about some of the families and situations that we were privileged to work with. Now in business, just like with our families, things don't always go the way we planned and every year there's a handful of circumstances and situations that create complex issues that we as a team try to collaboratively solve. Here are few situations that we encountered in 2016.

Disclaimer: We take our clients right to privacy extraordinarily seriously so these stories have been altered to protect the identity of our clients and serve only as an example of the said situation.

Our Hopeless Romantic

Everybody deserves to find that special somebody, but in this case, the unfortunate case of our newly established doctor, his special somebody decided to rack up an exorbitant amount of credit card debt that he was completely unaware of. Not only was he unaware that the debt existed and was in his name, he was also unaware that the payments had ceased to be made just as their relationship had come to an end. The good doctor came to us as a referral from a long time referral partner. He had an accepted purchase agreement in hand, proof of his earnest money deposit and a closing date that was 30 days out and counting. Upon pulling the good doctors credit we discovered that he had approximately $30,000 of credit card debt he was unaware of and credit scores in the low 500s which was a complete and utter surprise as he had never in his life missed a payment on anything. Due to a major collaborative effort between our credit reporting company and a "what if" scenario program that they offer, we were able to tell the good doctor exactly what accounts to bring current, pay down and pay off in order for his scores to increase enough for him to qualify for the loan he was applying for and all this was done inside of the 30 day window that we had to work with. The good Dr. is celebrating the holidays in the warmth and comfort of his own home and has since subscribed to a credit monitoring service and now gets an alert anytime a new account has applied for in his name :)

Welcome to (insert the name of any bank or credit union) how can I take your order?

This scenario starts with a client that found us online through social media. This particular client had very high scores, a great job and excellent income. In my first conversation with the client she shared her story with me. She let me know that she had went to three separate lending institutions trying to get qualified for a mortgage to purchase a home and had been turned down by each of them. She went on to tell me how her family had outgrown their existing home and was busting at the seams and that they were trying to purchase a larger home from a family member but due to the financing delays the family member was getting very impatient and the deal was on the verge of falling apart. Her existing home was already sold and under contract and if she wasn't able to figure out the financing on the purchase of her next home she would have to cancel the contract and start back at square one. After listening to her story I discovered what the issue was. She had told the same thing to each one of the banks that she had applied at "I want to purchase a home and use the proceeds from the sale of my existing home as my down payment." In the course of "taking her order" The banks all denied her because her debt to income ratios were too high. After explaining to her the advantage of paying off her higher interest-rate credit card and installment debt, lowering her down payment on the new mortgage however reducing the term on the new loan from a 30 year to a 20 year she was able to qualify for a lower interest-rate, increase her monthly cash flow and was able to close on a home that would fit her growing family!

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If you're anything like me then you dread going to the doctor, you dread going to the dentist, you dread shots, medical checkups, exams and tests that you can't pronounce the name of.  Just like most people when I hear the phrase "checkup", my "I don't want to do that" sensors immediately start to go off.  The term checkup is innocent enough but it can be associated with varying levels of pain, discomfort and scariest of all: the unknown!  Of course for me anyways these feelings and associations all happen in the blink of an eye, subconsciously. As a parent of two it certainly is my job to help my children understand the benefits of getting a checkup and to help them overcome the fear, the uncomfortableness and the potential pain of the dreaded exam.  So, in that parental spirit and without further ado, here are my six reasons why doing a mortgage checkup is less painful than a medical checkup and something every homeowner should have on their annual to do list:

  1. Convenience…scheduling a Doctor appointment can sometimes be quite the production arranging schedules, taking off work and having to drive across town can be a headache. When you get your mortgage checkup you can do it from the convenience of your own home, be in your favorite bathrobe or slippers watching your favorite reruns of SNL or Seinfeld, with your cat or dog snuggled on your lap. Some people prefer a face-to-face meeting, but generally most of our clients would rather start with a conversation over the phone that usually takes no longer than a half hour.
  2. Minimal preparation…let's be honest, you will be hard-pressed to find one loan officer anywhere in the country that will require you to "fast" prior to getting your mortgage checkup.  You may want to have a paystub handy, a recent mortgage statement and maybe your tax returns if your income is more complex; however, for the initial conversation most of the information is available right off the top of your head. So go ahead indulge in that pumpkin spice latte and grab that breakfast sandwich; getting a mortgage checkup will not require you to "fast" for 12 hours in advance of your appointment!
  3. Painless...A mortgage checkup is virtually painless!  You won't have to bend over and cough, be stuck with needles or subjected to any other types of physical invasions of your personal space!
  4. The Results can enrichen you...At the end of a mortgage checkup you may find out that you can eliminate your PMI, drop your interest rate, reduce your loan term and retire sooner, reduce your monthly payment, qualify for the purchase of an investment property or that you are in great shape already! Unlike being told you have high cholesterol and need to lose weight, a cavity that needs to be filled, a mole that needs checking into or additional test that need to be done, the results from a mortgage checkup will only help you save money, improve your credit scores and confirm that you're on the right track financially!
  5. 5....Knowing that you're in good shape on your mortgage, nothing is reporting erroneously on your credit and that you're in the lowest interest rate possible is most important. But, also that you're tracking to have your loan paid off on target and that your mortgage is working for you will help you sleep better at night, giving you the peace of mind we are all looking for!
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