Real Estate Financing
The new Good Faith Estimate makes its debut January 1, 2010. The new format will make it easier for Indianapolis home buyers to compare loans. Expanded from 1page to 3, the legislators responsible for the new Good Faith Estimate want it to be simpler for homeowners and home buyers to understand than the former version. By most accounts, Congress will meet this goal. The new Good Faith Estimate includes plain-English explanations of every fee, charge, and interest payment involved in a purchase or refinance. It also includes a section called “The Shopping Cart” in which applicants can compare lenders. The new...
Home affordability improved this week after the Federal Reserve released its November 3-4, 2009 meeting minutes. The FOMC Minutes is a companion to the Federal Reserve’s post-meeting press release. It’s released 3 weeks after the Fed adjourns and details the internal debates that shape our nation’s monetary policy. As compared to the press release, the minutes can be rather lengthy. November’s press release featured 428 words, the minutes offered 6531. However, this extra level of detail shapes markets and mortgage rates. With Wall Street unsure about the economy’s path, investors look to our nation’s central bankers for guidance. The Fed has made several points...
When a homeowner sells his home and decides to buy a new one, there are 3 basic options for the residence — sell it, keep it, or rent it. Unfortunately, no matter which path they choose, move-up home buyers in need of a new conforming mortgage will find qualifying for a home loan to be more difficult this season than in the past. Mortgage guidelines are dramatically tighter for people “carrying two mortgages”. Among the changes this spring’s buyers face: Selling the primary residence If you plan to close on your new home prior to the closing of your existing home...
For the first time in its history, the FHA changed its funding fees and mortgage insurance structure this week. FHA-insured home loans are now subject to a risk-based pricing adjustment. Because of risk-based pricing, FHA home loans are now more expensive for borrowers with less-than-ideal credit profiles, and less expensive borrowers with perfect ones. Prior to the changes, most FHA borrowers paid an up-front fee of 1.500 percent, plus on-going annual mortgage insurance payments equal to one-half-percent on the amount borrowed. FHA-insured mortgages have grown in popularity this year because, while the guidelines of other mortgage products have tightened, FHA program guidelines...
More commonly called “points”, discount points are up-front fees charged by mortgage lenders in exchange for lower mortgage rates. The cost of one point is one percent on the loan size and discount points appear on Line 802 of the HUD-1 Settlement Statement. As a general guideline, each point paid lowers a mortgage lender’s offered interest rate by 0.250%. For example, a $200,000 home loan offered at 6.000% can be had for 5.750% if the borrower agrees to make an up-front payment of one point ($2,000). Discount points can be an effective sales strategy for home sellers. In some areas...
