Why I Love Single Female Home Buyers

My home buyers come in all ages and stages, and I get enjoyment from all of them, but I have to admit that I probably like working with the single female home buyers the best.

Why do I love them so much?  In my experience, I've found that single women:

• Have done their math.  The ladies who are ready to take the step into home ownership on their own have typically thought the process through thoroughly.  They have studied their personal budget in depth before they ever meet with me, and they aren't going to buy beyond what they can comfortably afford.
• Are comfortable with asking questions.  If they don't know something, these ladies don't feel like they need to pretend that they do.  They ask.  If it doesn't make sense the first time, they ask again and again if needed until they feel that they truly understand the information.
• Share the emotion of the purchase.  Single female home buyers are often excited, nervous, hopeful, and terrified - sometimes all at once.  They feel these things, they're not embarrassed by it, and they bring me in on the experience with them.
• Want to learn.  I'm a teacher at heart, and my single female buyers often are the best students a teacher could have.  They care about the subject matter and invest the time in listening and learning all that they can.
• Have no patience for being talked down to.  If a Realtor, home inspector, insurance agent or mortgage lender treats them like they aren't equipped to buy a home because of their age or gender (or both), they're done.  No punches will be thrown, but no sales will be made either.  I love that.

A recent study found that single women buying homes currently outnumbers single men buying homes two to one.  Many causes are attributed to this - better educations, higher paying jobs, etc.   Regardless of the 'why' behind it, I love that single women and becoming more interested in owning homes of their own.

If you are a single woman considering a home purchase or you have one in your circle of family and friends, I want to help.  The solo female buyer can feel confident that they will get respect, education, and a sharing of the excitement from me as they embark on this exciting step.

So....come on ladies!  Let's buy some real estate :-).


Lori Hiscock is a Sr. Loan Officer at Ruoff Home Mortgage‘s South Bend office.  One of Michiana’s top mortgage loan officers, Lori started her lending career in 1995 after obtaining her bachelor’s degree in Finance from Western Michigan University.  You can connect with Lori Hiscock or apply online here.

The Most Frustrating Piece

After years in the mortgage industry, I've noticed that one piece of the loan approval process consistently causes frustrating for home buyers.  Here's a summary of what it is and how a buyer can minimize the frustration caused by it.

Lori Hiscock is a Sr. Loan Officer at Ruoff Home Mortgage‘s South Bend office.  One of Michiana’s top mortgage loan officers, Lori started her lending career in 1995 after obtaining her bachelor’s degree in Finance from Western Michigan University.  You can connect with Lori Hiscock or apply online here.

Turning Your $2,900 Tax Refund Into $194,417

I'll admit it, I'm HORRIBLE about pre-spending my annual tax refund.  I don't actually spend it before February but I typically have a specific plan for that money months and months before it ever arrives from the IRS.

Typically it goes for something reasonable like paying off a debt, shoring up some savings or replacing something that needs replaced.  All of those are valid, good uses for my refund, but none of those uses help me out long term.  None of those uses set me up for a more stable financial future.

But what if your tax refund could?  What if you could take a $2,900 tax refund and, over time, convert it into $194,417?

Let's Buy A Home!

You could do exactly this if, instead of frittering your refund away, you invested it in a home purchase.  Let me share the details with you.

To buy a home with a FHA mortgage, you need 3.5% of the homes price as a down payment.  There are also costs involved with getting the loan and covering your first year of insurance, tax escrows, etc. but you can normally negotiate for the seller to cover those for you.  By having the seller cover those, your $2,900 tax refund will cover the entire down payment needed on a $82,850 home. 

Yes, There Are Ownership Costs....

Of course, there will be a monthly mortgage payment that goes along with that $82,850 home, but it is likely similar to or less than your current rent.  The estimated mortgage payment on an $82,850 home right now is $650 per month, give or take a bit depending on the interest rate, property tax costs and home insurance costs.

This $650 should cover the mortgage payment, but you will need to plan for other costs as well.  Utilities will be covered by you as will maintenance and repairs.  People tend to forget about these last two pieces when dreaming about home ownership and you really shouldn't. Things will break.  It's part of life.

If covering the cost of future repairs concerns you, you can ask the seller to buy a one year home warranty for you up-front that will cover many of those costs in the first year if they arise with you just paying for a small service call fee.  This gives you a year to get comfortable with the home and get a feel for what might break in the future.  At the end of that year, you can renew the warranty at your own cost if you wish. 

But, OH, the return!

 So yes, there will be reoccurring care costs with owning a home and you will likely need to invest your entire tax refund into it upfront, but OH, the return it will give you!  You see, every year, your home value increases.  Certainly, there are years and economic cycles where home values dip but when viewed long term, you can reasonably expect an increase in your home's value. 

To be conservative, let's assume your home goes up in value 3% each year (last 15 year average was 4.2% per Zillow).  Each year you are also paying the mortgage down.  After 30 years, you will have the mortgage paid off and - assuming that 3% increase each year - your home will be worth $194,417.

Is that right??  Yep, that's right.  By investing your tax return now and paying a mortgage payment instead of wasted rent, you will build an asset that will not only provide you shelter but, 30 years from now, will be worth almost $200,000 if you chose to sell it and move to Cancun. 

Not For Everyone, But Maybe For You

Truly, home ownership is not for everyone.  Many people have no cushion in their budget to cover the occasional repairs that come up, even with a home warranty in place.  Some people are not going to stay in the area long-term so the magic of time won't really work for them.

For many people though, home ownership makes perfect sense.  The 2010 median net worth for a renter in America was $5,100 while the median net worth for a home owner was $174,500.  The value of the home itself is a large reason for this. 

So, you have a choice.  Pay down the credit card, buy the bigger TV or invest in an asset that will start you on a path to greater wealth and security.  Which makes more sense to you?




Lori Hiscock is a Sr. Loan Officer at Ruoff Home Mortgage‘s South Bend office.  One of Michiana’s top mortgage loan officers, Lori started her lending career in 1995 after obtaining her bachelor’s degree in Finance from Western Michigan University.  You can connect with Lori Hiscock or apply online here.

How To Become a Real Estate Investor

I often have people contact me who are interested in purchasing an investment property.  They think that real estate could be a good investment for their futures and they want to wade into the arena while the home prices and interest rates are still low.

I couldn't agree with them more.  Owning investment homes has been a part of my financial plan for 10+ years.  It has provided my family with a higher net worth than we would have had otherwise and, if all goes according to plan, it should let me retire in my late 50's with a steady stream of rental income to cover our expenses so that I can spend my days reading great books and kayaking on the creek behind our home.  Ahhhh.....

But I digress.  Owning rental homes is a good option for you to consider.  Before progressing too far though, there are some things that you need to know....

You Gotta Have Some Money

When you're buying a home to live in, the financing terms are pretty flexible.  FHA will let you buy with 3.5% down and USDA with 0% down.  If your income is within the right range, you could even qualify for down payment help from the state.  If the seller is willing to cover your closing costs, you could potentially buy a home to live in right now with no personal investment from your savings.

Not so with an investment property.  If you're using the traditional structure where you get a mortgage from a bank for the purchase, you typically need 20% of the price down with an investment property (ie, $10k down on $50k purchase, $20k down on $100k purchase, etc.).  Unfortunately, many first time investors don't have that much available.

If you can find a home that you like that is a Homepath home, the down payment needed drops to 10%.   Homepath homes are homes that have been foreclosed on by Fannie Mae.  You can find eligible ones here:  http://www.homepath.com/. 

This 10% is still more than many first time investors have in liquid funds, though.  The only other real option, then, is to try buying with non-traditional financing.  Sometimes a seller will act as the bank for you (called a land contract sale or lease option).  Other times, you can find a partner who has the liquid money ready to invest. 

These scenarios can be hard to find though.  Most investors will need to wait to purchase their first investment property until they have saved the money needed for that 10% or 20% down payment.

Your Bills Need To Be Lower

Another thing that gets in the way for many first time investors is that their current bills are too high to qualify for the new mortgage.  When a bank is reviewing your finances for the mortgage approval on the investment property, they will add up your current bills (mortgage on primary home, car payments, student loans, credit cards, etc.) and then add the mortgage payment for the investment property to that amount.  Once they have that total, they will divide it by your gross monthly income.  Ideally, all of those monthly payments including the new mortgage should total less than 36% of your monthly gross income.  You may be approved up to 43% if your credit is good and you have strong savings, but 36% is the target. 

The bank typically won't give you any credit for the expected rental income on the home you are buying because you are new to the investment game, so your current income has to be high enough or your current bills have to be low enough to fit the new mortgage in as-is.  If the space isn't there, you may need to reduce your bills or increase your income before qualifying for this mortgage.

Your Savings Needs To Be Higher

The last hurdle most investors face is that their savings aren't high enough to be approved.  Many would-be investors already have a mortgage on the home they live in.  When the bank is looking to approve them for the new mortgage for the investment property, they are going to want the buyer to have six month's worth of mortgage payments for both their current home and the new home set aside in savings. 

This six months is in addition to the down payment money needed, which makes a hard savings target even harder to hit.  The good news on this is that these savings can be held in a retirement account.  If you have a 401k or IRA that has a larger balance, that investment can often be used to meet the requirement for savings.  If you don't though, you may need to save this six months of reserves before jumping into the investment property pool.

The Bottom Line

So what's the bottom line to all of this?  Many people want to invest in real estate, and they should.  It can be a great way to build current income and long-term wealth.  It's not an easy market to get into though.  By understanding the lender's requirements in terms of down payment, debt load and savings, you will be better equipped to plan for your future and step into this arena when the timing is right for you.



Lori Hiscock is a Sr. Loan Officer at Ruoff Home Mortgage‘s South Bend office.  One of Michiana’s top mortgage loan officers, Lori started her lending career in 1995 after obtaining her bachelor’s degree in Finance from Western Michigan University.  You can connect with Lori Hiscock or apply online here.

So The Poo Can't Get Through

When someone is buying a new home, their thoughts are typically full of barbeques and decorations, holidays and new memories being made.  Some buyers might be more focused on the buying mechanics like inspections, appraisals and loan approvals.  Few homebuyers are thinking about sewage stuff though.  Few buyers are thinking about the poo.

Poo matters though, especially for homes with septic tanks.  This is a bit of an icky topic but it's one that home buyers should be educated on so let's take a couple of minutes to talk about what happens to poo in your new home and how it can impact you.

What is a septic tank?

For starters, let's talk about septic tanks.  If your new home is on city water and sewage, this doesn't impact you.  For many home buyers in Michiana, though, their new home has a well for water and a septic tank for waste.

A septic tank is simply a big concrete or steel tank that is buried in your yard.  The waste water from your sinks, toilets and tubs flows out of your house through piping and into the septic tank.  Once there, the heavy stuff (think food waste and heavy poo) settles to the bottom as a sludge layer, the lighter stuff (think TP and floating poo) goes to the surface as a scum layer.  In between those is a cleaner water layer.  This water layer isn't 'clean' clean though.  It has household chemicals and human-made chemicals in it that make it pretty gross still and definitely unfit for any form of drinking.

What is a drain field?

This is where the drain field comes in.  When new waste comes into your septic tank, it pushes old waste out.  That old waste flows through 4 inch perforated pipes that are buried in gravel about 4-6 feet down under the dirt in your yard. 

The old septic water slowly seeps out of those perforated holes in the pipes as it flows through them.  How fast it seeps out and how long those pipes need to be depend on the nature of the soil that they are buried in.  If it's clay or stone, the water will leak out slowly so the drain field needs to be larger to give it enough space.  If the soil is sandy, the water will vacate more quickly so the drain field can be shorter. 

All of this is powered by the magic of gravity.  Your house is higher than your septic tank and your septic tank is higher than the drain field pipes.  As you flush, wash, and do other household tasks involving water, this system automatically works to remove it and filter it for you.

What about the well?

Ah, now we're getting to the important question.  If you're on a well/septic system, your household water is coming from a well.  And where is that well water coming from?  Your yard.  And what water is found in your yard?  In addition to the God-given rain water, it's the water that is coming from your drain field.

It sounds gross in theory, but the system typically works great.  The water seeping out of your septic through the drain field is filtered by good old Mother Earth to the point where it is safe by the time it reaches your well. 

Where It Can Go Wrong

There is risk here though.  The septic system could be working incorrectly.  Your well water could be contaminated.  That's why St. Joseph County requires all septic systems to be inspected and all water to be tested at the time of a property transfer.  It's an important step to make sure your water is currently safe and is likely to continue being safe.

Typically these two tests are all that is needed when you're buying a home.  If you are buying a home with FHA financing, though, FHA requires more.  To protect the homebuyer, FHA requires that the well be at least 50 feet away from the septic tank, 100 feet away from the drain field and 10 feet away from the property line.  Click here to see the actual HUD Property Guidelines (see page 12, 3rd paragraph).  If the county's code is looser than this, HUD will allow the drain field distance to be reduced to 75 feet but that is the minimum. It doesn't matter if the water test passes and the septic system is fine.  FHA wants these distances met.

Here's where this is a problem.  In our neck of the woods, drain fields and wells are often less than 75 feet.  We have smaller lots in some areas and these pieces all have to fit into them.  Our county only requires a 50 foot distance between the well and drain field so many installers have installed septics based on this.  That means these homes don't meet FHA's guidelines.

Many times, a home won't meet FHA guidelines and the FHA financing will still go through.  If the appraiser says the home appears to meet FHA's guidelines for well/septic distances, the lender normally doesn't call for an inspection to verify it.  An appraiser may say this and be wrong though.  That happens.  A lot.

The appraiser may not say that it meets the requirements also and then the lender is going to need to have those distances measured to see if the 75 feet is met.  If it is not, the well will need moved, the buyer will need to convert to conventional financing or the sale will not be able to proceed.

If you're buying a home with a well and septic system, it's important that you understand the basics of how they work.  If you're buying that home with FHA financing, it's VERY important for you to understand FHA's rules on this.  It can prevent your financing from going through if the distance is shorter than allowed.  While a waiver can be obtained from FHA sometimes (typically if the soil is largely rock or clay), there's no guarantee.  FHA doesn't want the poo to get through, so they grant those waivers cautiously.

Working with an educated lender who understands the way septic systems work and how FHA judges them differently is going to be important to your overall home buying experience.  Be picky.  Work with an expert who can help make your home buying experience smooth so that you can forget about the poo and get back to planning that first barbeque.



Lori Hiscock is a Sr. Loan Officer at Ruoff Home Mortgage‘s South Bend office.  One of Michiana’s top mortgage loan officers, Lori started her lending career in 1995 after obtaining her bachelor’s degree in Finance from Western Michigan University.  You can connect with Lori Hiscock or apply online here.

How to Save Money On Mortgage Insurance

If you are buying a home, you may have been told that you will pay for mortgage insurance as a part of your monthly payment.  You probably don't quite understand what that is though or, more importantly, how you can reduce the cost of it.  Let's dig into this topic to see if we can save you some money.

What Is Mortgage Insurance?

First, you need to know what mortgage insurance is.  Mortgage insurance (also called MI or PMI) is an insurance policy which compensates lenders or investors for losses due to the default of a mortgage loan.  In a nutshell, if you don't pay the loan back and the bank has to foreclose on you, it covers the shortage so that the bank doesn't take a loss.  The cost for this insurance is added into your payment each month, making you pay more for the home.

What Determines the Cost?

The cost for mortgage insurance is impacted by several factors.  The most important one is the type of loan you are using:

1. VA Loan - a VA loan has no monthly mortgage insurance cost which is awesome.  Because this type of loan is only available to eligible Veterans, it isn't a fit for most buyers.  If you are a Veteran though, DEFINITELY look into this.  It's a significant savings.
2. USDA Loan - a loan guaranteed by the USDA has a lower monthly cost for mortgage insurance (currently 0.4% of the loan amount per year).  This is normally one of the lower priced routes to go, but, like VA, this type of loan isn't for everyone.  It can only be used when buying in USDA eligible areas.  Your household income can't exceed a certain level also.  To look at the income and geographic limits that pertain to you, go here:  USDA Property and Income Eligibility.
3. FHA Loan - For most FHA buyers, there is a big-old charge for mortgage insurance added into you payment.  Currently, it's 1.35% of the original loan amount annually (paid in 1/12th increments each month).  Typically FHA is the most expensive option so it should not be a buyers first choice unless other factors about FHA make it necessary.  FHA is more flexible with lower credit scores, lower down payments and higher debts so sometimes this higher charge for mortgage insurance is necessary to get these looser guidelines.
4. Conventional Loan - If you're not a Veteran or buying in a USDA eligible area, this is the option you should be exploring more because it gives you more control over the mortgage insurance premium.  How's that, you say?  I'm glad you asked.....

Getting Cheaper Mortgage Insurance on Conventional Loans

There are reasons why conventional financing won't work for certain buyers (see FHA bullet above for a partial list).  If you don't need the increased flexibility offered by FHA financing, though, you can typically save money by using Conventional financing and getting savvy on the mortgage insurance.  Here's how to reduce the cost:

• Increase your down payment - the cost for mortgage insurance is tiered based on the percentage of down payment you have.  It gets cheaper with every 5% threshold you hit.  These are the current rates with Radian (one of the top four MI providers):  For 5%-9.99% down - 0.59% per year.  For 10%-14.99% - 0.44% per year.  For 15%-19.99% down - 0.28% per year.  With down payments of 20% or more, mortgage insurance is no longer needed.
• Increase your credit score - those rates mentioned above are assuming your credit score is 760 or higher.  What if it's 720 or 740 though?  That MI cost with 5% down increases from 0.59% to 0.67% per year.  If your score is 700 it goes up to 0.94%.  Given how much the premium can move with a relatively minor change in your credit score, it's worthwhile to try to get your score up as high as you can before buying a home.
• Have your lender shop it around - the last important step is to make sure you're working with a lender who shops the mortgage insurance around to more than one provider.  Surprisingly, not all do this.  As a matter of fact, MANY don't.  Make sure the lender you pick does so that you're not paying more than you need to be.

Buying a home is more than just finding a new place to live.  It's an investment in your future.  Wise investors do the upfront homework needed to make sure they aren't overpaying on all aspects of the purchase, including the mortgage insurance. 

Wise home buyers also get wise counsel.  Make sure you are doing that by working with a mortgage lender who understands the nuances of mortgage insurance and will educate you on ways you can save money when buying your new home. 


Lori Hiscock is a Sr. Loan Officer at Ruoff Home Mortgage‘s South Bend office.  One of Michiana’s top mortgage loan officers, Lori started her lending career in 1995 after obtaining her bachelor’s degree in Finance from Western Michigan University.  You can connect with Lori Hiscock or apply online here.

What You Need To Know About Collections

When I discuss credit report collections with my buyers, they are often confused by them.  Sometimes they were not aware that they existed at all.  Other times, they knew they were there but they're shocked that they're still reporting, often after many many years. 

Given the global confusion about collections, I thought I'd share a little information about how collections work and the timelines related to them.

Statute Of Limitations

There are two timelines to be aware of in terms of collections:  The credit reporting time limits and the state's statute of limitations. 

The statute of limitations is the time limit during which a creditor can sue someone for a debt.  The limit varies depending on the state and the type of debt in question.  For debts with written contracts or promissory notes attached, it's 10 years in Indiana.  For oral contracts or open ended accounts (credit cards, phone contracts, etc.), the limit is 6 years.

This statute only says that a creditor can no longer use the courts to force you to pay a debt after that window.  Here's what the statute of limitations does not do:

• Keep a collector from filing a lawsuit against you anyhow - sadly, a creditor can still file a lawsuit.  You can use the statute as a basis to win that suit, but they could still bring you to court or, more likely, threaten to in the hopes of collecting from you.
• Erase the debt - the debt doesn't go away after this window expires.  They just aren't supposed to sue you beyond that, but you still owe the money and they can still try to collect.
• Stop credit reporting - this is where collections impact most people.  These often show up on the credit report and are factored into the credit score.  The statute of limitations doesn't stop a creditor from reporting the debt against you to the credit bureaus.

One important thing to know - you can reset the clock on the statute of limitations without being aware of it.  Simple things like agreeing to make a payment or even acknowledging that the debt is yours can restart that six or ten year window.  Given this, it's wise to be VERY cautious when talking to a creditor and volunteer nothing about the debt in question. 

Credit Reporting Time Limit

While it's good to know about the statute of limitations, what home buyers really need to understand is the rules for credit reporting time.  How a creditor reports your debt to the credit bureaus is what will impact your score and your ability to get a mortgage.

Here's the good news.  Creditors can only keep information about a delinquency, collection or charge off on your credit report for 7 years from the original default date.  They can not sell it or play other sneaky games to 're-age' the debt.  You can admit that it's yours all you want and it won't mess things up.  The law says that it can stay on your report seven years only.

That being said, creditors can do a lot of unpleasant things to mess up your score in those seven years.  A popular tactic recently has been to report old collections as if they are currently past due.  A person may have stopped paying AT&T in 2009 but AT&T (or, more typically, the collection agency that they sold it to) is reporting it as if it is a current bill that is past due right now.

Because the credit scoring model places higher weight on recent activity, these 'recent late payments' on an old debt can really pull down your credit score.  That's exactly why the creditors are doing it. They want to put pressure on you in hopes that you will pay them to make it go away and improve your credit score.

What You Should Do

Home buyers often ask me what they should do in situations like this.  Normally, my answer is 'Pay them.'  If you have open collections and an ability to pay them off, you should.  Even if a creditor is playing nice right now, there's no guarantee that they won't start reporting you as late down the road. The best way to keep them from doing something to pull down your score is to pay off the debt and be done with it once and for all.

If the creditor isn't reporting recent activity though and the debt is over five years old, sometimes it's wise to let it slowly fade away.  Paying it now could actually pull your score down temporarily because it would show as a recent activity on a collection account. 

The problem with leaving it alone, though, is that it's a gamble.  There is no guarantee that the creditor won't start getting creative once their time limit gets close to running out.

Really, the best route is to sit down with someone who has a strong working knowledge of credit scoring and can review your situation with you.  Together, you can work out a plan to handle the collections and get you in the right place to buy a home.  Do you think that you don't know anyone who understands credit reporting?  Sure you do (hint - it's me). 

Give me a call or drop me an e-mail.  We'll get a plan in place to get you into your home as soon as possible!



Lori Hiscock is a Sr. Loan Officer at Ruoff Home Mortgage‘s South Bend office.  One of Michiana’s top mortgage loan officers, Lori started her lending career in 1995 after obtaining her bachelor’s degree in Finance from Western Michigan University.  You can connect with Lori Hiscock or apply online here.