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Posts from the ‘Conventional’ Category

Buying a home? Misc. fees could cost you thousands. Here’s what to expect.

CHOOSE A TRUSTED and RECOMMENDED MORTGAGE PROFESSIONAL! I read this article this past Sunday.  I was astounded that this even happened.  As a mortgage professional, it is my job to prepare an accurate Lending Estimate (formerly known as the Good Faith Estimate) for a borrower.  I’m responsible for quoting all closings costs, most of which aren’t even lender fees.  If I get it wrong, I/the lender am/is responsible.  The article does talk about Home Owner Associations in which the lender may or may not find out certain info.  Each lender will have their own requirements of what they want to know about a particular HOA.  So I recommend buyers and their attorneys vet the HOA about special assessments, budgets and reserves.  But closing costs?  This is my job; to disclose all costs associated with closing on a loan, refinance or purchase.

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by Danielle Braff Chicago Tribune

 

You’ve likely heard of closing costs when buying a home, but this umbrella term includes a whole host of expenses — from appraisal and attorney fees to transfer taxes and title insurance — that you may have to pay before you get the keys to your new abode. And the jig’s not up once you own. Depending on the type of property, you may be shelling out other unexpected sums, such as special assessments. If you’re planning to purchase a home, make sure you plan ahead for these often-overlooked fees.

That’s something Nors Beatriz, 54, wished she’d done before buying her first home, in Chicago’s Albany Park neighborhood, about 12 years ago.

The artist and jewelry-maker saved $20,000 for a down payment on a $235,000 home, but she wasn’t prepared to pay an extra $10,000 in closing costs. (According to online real estate marketplace Zillow, closing costs are typically 2 to 5 percent of a home’s purchase price.)

“There were so many more fees than I expected,” Beatriz said.

“I hired a lawyer who was supposed to look over the contract, but he never read it, and a couple months later, I found out that I had three mortgages — and they were balloon mortgages,” she said.

She struggled to get them consolidated, but then the market crashed, and her bank went out of business.

read more via http://www.chicagotribune.com/classified/realestate/ct-re-0910-unexpected-costs-20170906-story.html

 

 

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More Money, More Problems: When a Big Down Payment Could Spell Trouble

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Hey, there’s nothing wrong with making a sizable down payment—if you’ve got the money to support it. Financial experts advocate putting at least 10% or 20% down, and we’ve got to agree: The more you can pay at the start, the easier managing your mortgage will be.

But there’s a caveat: Sometimes putting down a ton of cash can actually wind up compromising your quality of life or future savings goals. In some cases it can actually hinder your ability to close on that dream home you spent so long saving up for.

Here are five reasons you might want to dial down your payment.

You’ll flush your emergency fund

“Under no circumstances should buying a house be an emergency,” says Jeff Jones with Longview Financial Advisors in Huntsville, AL.

Raiding your emergency fund for the sake of a giant down payment isn’t smart—and it means you’re more likely to find yourself in a terrible position if you lose your job or wind up otherwise financially incapacitated.

Jones recommends building a three- to six-month emergency fund—the longer the better, especially if you have kids—and “not touching it unless it’s truly an emergency.”

And remember: Building this emergency fund comes firstbefore buying the house or even building your 401(k).

If your home-buying aspirations mean you’re skipping the safety net, you need to take a step back and save first. Don’t plunk down a huge down payment if it means leaving yourself vulnerable.

You won’t be able to cover closing costs

Don’t let the massive specter of your down payment make you blind to all of the other expenses that come with closing on a home, which can run about 3% to 6% of the purchase price.

If you’ve put all your money toward one massive down payment, you’re sure to be surprised by the myriad expenses—fees, taxes, the cost of an independent home inspector—all of which need to be paid once your sale is final.

 And, of course, the ultimate closing cost: moving itself.

It might not be much—maybe just the cost of pizza and beer for your buddies—but if you’re moving cross-country or even cross-city, costs can easily inch into the thousands, Jones says.

You might not be able to afford the mortgage

Ever heard the term “house poor”? It refers to buyers who have more house than they can afford, and are in over their head with mortgage and tax payments. Scary stuff.

Trust us—you don’t want to be one of those people.

While this is common among buyers who can offer only the smallest possible down payments, it’s also a potential problem for people who put down more than they can afford. If 20% down strains you, chances are good that the costs associated with owning that home are going to strain you, too.

Your home might be empty

Let’s face it, an empty home is hardly a home at all—and if you’ve spent all your money on the excessively massive down payment, your home might be empty for a while. What’s the purpose of buying a new home if you can’t afford the sofa sectional to put in it?

Especially if you’re moving from a smaller apartment into a home, there’s nothing sadder than an endless succession of empty rooms. It’s not that you need lavish accommodations—really, this is just another symptom of buying more than you can afford—but wouldn’t it be nice to at least put a bed in the guest room?

Retirement, vacations, college—all might be out of reach

So you’ve poured all your money into a down payment, and you’re squeaking by just to pay the mortgage. The potential result: no money left over for the other things that matter in life.

read more via http://www.realtor.com/advice/finance/when-a-big-down-payment-could-spell-trouble/?identityID=10250946&MID=2015_0807_WeeklyNL&RID=361386642&cid=eml-2015-0807-WeeklyNL-blog_2_big_down_payment-blogs_buy

CFPB announces finalized TILA-RESPA effective date

The Consumer Financial Protection Bureau has finalized the extension of its Know Before You Owe disclosure rule effective date.

The CFPB announced the finalization of the effective date on Tuesday. The rule, also called the TILA-RESPA Integrated Disclosures rule, will take effect on Oct. 3.

“The Bureau believes that moving the effective date may benefit both the industry and consumers with a smoother transition to the new rule,” the CFPB stated in a press release. “The Bureau further believes that scheduling the effective date on a Saturday may facilitate implementation by giving the industry time over the weekend to launch new systems configurations and to test systems.”

The rule was originally scheduled to take effect Aug. 1. However, both industry groups and Congress pressured the CFPB to extend the effective date – or at least institute a grace period – citing concerns that spotty implementation in the early days of enforcement could lead to problems.

via http://www.mpamag.com/news/cfpb-announces-finalized-tilarespa-effective-date-23295.aspx#.Va6urX58PBM.facebook

Calling All Home Buyers! The 3% Down Payment Makes a Comeback

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New programs available for first-time and lower-income homebuyers.

Socking away enough for a down payment isn’t easy. In fact, recent research found that, with Americans’ current savings rate, it would take the average buyer as long as 12 years to build up a 20% down payment on a median-priced home. Fannie Mae announced an option for qualified first-time homebuyers that will allow for a down payment as low as 3%.

As a result, many first-time, younger and lower-income homebuyers have been largely left out of the housing market in the years since the recession.

Now, Fannie Mae and Freddie Mac are hoping to change that. The mortgage giants announced on Monday that they would begin backing mortgages with down payments as low as 3%. Fannie’s program will start this month; Freddie’s will begin March 2015.

The catch? Borrowers would have to meet strict standards to be eligible, such as a credit score of at least 620. The program would also only be available for first-time homebuyers, those who haven’t owned a home in a few years, and people with lower incomes. Further, borrowers would be required to undergo home-buyer counseling and purchase private mortgage insurance before signing on the dotted line. And those eligible for the program would likely have to meet other measures to offset the increased risk, like boasting a low debt-to-income ratio.

“This will be particularly helpful to those who are strapped by wealth rather than credit challenges,” Jim Parrott, a senior fellow at the Urban Institute, told The Wall Street Journal. – See more at: http://www.trulia.com/blog/calling-home-buyers-3-payment-makes-comeback/?ecampaign=cnews&eurl=www.trulia.com%2Fblog%2Fcalling-home-buyers-3-payment-makes-comeback%2F#sthash.yY8d4i4n.dpuf

The Truth About Buying a Home: You DON’T Need 20% Down

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In a recent survey, How America Views Homeownership, it was revealed that 68% of Americans feel that now is a good time to buy a home and 95% said they want to own a home if they don’t already.

Franklin Codel, head of Wells Fargo home mortgage production, explains:

“Although the home buying process has changed in many ways in recent years, our survey found Americans still view homeownership as an achievement to be proud of and many believe that now is a good time to buy a home.”

Confusion Creates Paralysis

However, the survey also reported that many are afraid to purchase a home because of uncertainty about “qualifying for a mortgage or navigating the home buying process”. Though 74% said they “know and understand” the financial process involved in buying a home, they also gave answers that suggest otherwise. For example:

•30% of respondents believe that only individuals with high incomes can obtain a mortgage
•64% of respondents believe they must have a “very good” credit score to buy a home
•44% believe that a 20% down payment is required

In actuality many of these beliefs are unfounded. Let’s look at the question of down payment:

Freddie Mac, in a recent blog post addressing the issue, confirmed that there is misinformation regarding the amount necessary when determining the down payment for a home purchase:

“Did you know 40 percent of today’s homebuyers using mortgage financing are making down payments that are less than 10 percent? And how about this: since 2010, the number of people putting down less than 10 percent for conventional loans has grown three fold. So, not only are low down payment options real, they represent a significant portion of today’s purchases.”

In a separate Executive Perspectives, Christina Boyle, Freddie Mac’s VP and Head of Single-Family Sales & Relationship Management explained further:

•A person “can get a conforming, conventional mortgage with a down payment of as little as 5 percent (sometimes with as little as 3 percent coming out of their own pockets)”.
•Qualified borrowers can further reduce the down payment coming out of their own pockets to 3 percent by lining up gifts from family, grants or loans from non-profits or public agencies.

Education is the Key

Boyle talked about the importance of educating potential buyers:

“Letting more consumers know how down payments are determined could bring more qualified borrowers off the sidelines. Depending on their credit history and other factors, many borrowers can expect to make a down payment of about 5 or 10 percent.”

Codel agreed:

“It is important for prospective homebuyers to feel empowered to ask lenders and real estate agents questions about available options, such as down payment assistance or FHA loan programs or VA loans for veterans.”

Bottom Line

If you are saving for either your first home or that perfect move-up dream house, make sure you know all your options. You may be pleasantly surprised.

via http://www.keepingcurrentmatters.com/2014/09/23/the-truth-about-buying-a-home-you-dont-need-20-down/

Fannie Mae and Freddie Mac Announce HARP Changes

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While we don’t know the full details of the proposed program until November, I wanted to give you a heads up… if you’d like to take advantage of the HARP program, I’d be happy to check and see if Fannie or Freddie owns your mortgage.

Washington, DC – The Federal Housing Finance Agency, with Fannie Mae and Freddie Mac (the Enterprises), today announced a series of changes to the Home Affordable Refinance Program (HARP) in an effort to attract more eligible borrowers who can benefit from refinancing their home mortgage.   The program enhancements were developed at FHFA’s direction with input from lenders, mortgage insurers and other industry participants.

In general, borrowers must meet the following criteria:

  •  The mortgage must be owned or guaranteed by Freddie Mac or Fannie Mae.
  •  The mortgage must have been sold to Fannie Mae or Freddie Mac on or before May 31, 2009.
  •  The mortgage cannot have been refinanced under HARP previously unless it is a Fannie Mae loan that was refinanced under    HARP from March-May, 2009.
  • The borrower must be current on the mortgage at the time of the refinance, with no late payment in the past six months and no more than one late payment in the past 12 months.

Also, new highlights include:

 * Eliminating certain risk-based fees for borrowers who refinance into shorter-term
mortgages and lowering fees for other borrowers;
* Removing the current 125 percent LTV ceiling for fixed-rate mortgages backed by
Fannie Mae and Freddie Mac;
* Eliminating the need for a new property appraisal where there is a reliable AVM
(automated valuation model) estimate provided by the Enterprises; and
* Extending the end date for HARP until Dec. 31, 2013 for loans originally sold to the
Enterprises on or before May 31, 2009.

via:  http://www.fhfa.gov/webfiles/22722/HARP%20release%20102411%20Final.pdf

New Information Coming Soon

In the weeks to come I will be adding educational resources to my website that will inform you on how to get the best loan for you, or get the most out of the one you have now. To be sure that you know when I update this, subscribe to anyone one of my social media channels or the blog itself. I look forward to partnering with you to create a prosperous financial future!