Tag Archive for: tips for home buyers

Know Before You Owe

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There are many moving parts when it comes to buying a home, but one of the biggest complaints I’ve gotten as a Realtor is about how confused clients are by mortgage loan documents. Instead of clearly stating financing options, they tend to confuse consumers.

But last month, the Consumer Financial Protection Bureau (CFPB) released their new rules on mortgage servicing, mortgage loan origination compensation, and the mortgage origination process. As part of the “Know Before You Owe” program I believe these will go a long way toward empowering borrowers with the detail they need to make an informed decision.

I’ve had many clients ask me questions about the loan docs from their lender because they typically struggle when comparison shopping for mortgage products. However, the revised documents are much clearer and offer more of an “at a glance” comparison guide to the pros and cons of a selection of loan options.

Additionally, because the Loan Estimate and Closing Disclosure are very similar in format, they will enable consumers to easily compare the estimate with the final terms of the loan. It will therefore be less likely for the borrower to be blindsided by hidden costs and unwelcome surprises at the closing table.

The revised Closing Disclosure will be particularly advantageous to home buyers. At present, the HUD-1 settlement statement is typically disclosed the day before the closing. Under this new program, a detailed accounting of the transaction will instead be released for their review three days prior to the scheduled closing. This will now allow borrowers some much needed time to actually review final loan terms and costs. They will fortunately now have time to ask important questions and even potentially negotiate some closing costs prior to the closing.

The scheduled effective date is August 1, 2015, but the Consumer Financial Protection Bureau is already working with industry and consumers toward implementation. Coupled with the strong real estate market recovery in many sectors across the country, procedural reforms like these are a big part of consumer confidence and a renewed sense of faith in the mortgage industry overall.

Real Estate Resolutions and Goals

real estate consultationsIf you are considering selling your home, you probably want to also prepare for what to expect when you close on the sale. In other words, a little insight into what awaits on the buyer’s side of the transaction. Ideally, you want to secure the best advantage possible when it comes to what you need and where to spend your money.

Renting a home can be the ideal solution in some circumstances: perhaps you are going through a life transition, moving to a new part of the country and want to determine where you will feel most at home, etc. But if you are renting and considering to buy, or are ready to sell and purchase another home, your wish list should include your long- and short-term goals.

  • The best solution is to take the emotion out of the process. Real estate is an investment; it needs to be considered accordingly. So front and center on your list is what you can afford to pay on a monthly basis to include: PITI (principal, interest, taxes, and insurance) as well as maintenance cost projections, utilities, and possible HOA fees.
  • The left side of the page should contain the wish list of amenities: pools, square footage, number of bedrooms and bathrooms, etc.
  • The right side should contain your goals: will you be working out of your home, do you have children poised to move out or back in, are you looking to live there for 3 or for 30 years?
  • This literal picture of your objectives will go a long way in the consultation with your Realtor. And depending on where you want to live, you might even be able to afford a home that may have previously been fiscally out of reach.

As in any financial decision, the consideration of your long- and short-term goals while making sure you have a comfortable cushion to prepare for any eventuality is a must. The best advice I can offer is to be certain you surround yourself with real estate and financing professionals who will help assess your circumstance from every angle.