As April 1 approaches I have to think to myself how many will get priced out of buying that dream home. Don't get me wrong, rates will still be good and home prices low but 2 major factors will be happening that will drive the cost of borrowing money and owning a home up.
First off Fannie Mae and Freddie Mac are making adjustments to their risk based pricing. What that means is that the adjustments to interest rates will go up for various items. Typically these will include type of loan, loan to value, credit score, combined loan to value, type or property and a few other items. These adjustments will affect the interest rate a particular consumer will be able to receive.
Shortly after this FHA will be following suit in raising their costs but will be doing it via their mortgage insurance premiums which will affect your payment and home affordability.
Second is that the Dodd-Frank Act is going to start coming in to full swing. This was passed to keep financial institutions in check. April 1 is when the portion of the act that affects how lenders and loan offers can be compensated comes in to effect. This could potentially affect borrowing costs either in actual costs paid or the interest rate paid. Lenders have had some time to figure this all out but the clarity of the act is vague and the FED is not even sure what part of it means.
Now all of these can and could affect your affordability but you need to remember that rates are still low and home prices are as well. So it still has not been a better time to buy a home. First time buyers especially can buy more home then they dreamed of a few years ago and they need to get out there and buy. Move up buyers can buy that "mansion" they always wanted and of course 2nd homes and investment properties have no where to go in value but up if you buy now.
Make sure to let me know if you have any questions or comments and have yourself a great week.
Tuesday, March 15, 2011
Monday, March 7, 2011
3rd Party Performers and the state of Mortgages
As previously mentioned on the last post I would talk a little about the appraisal and the title company.
First off on the appraisal all it does it gives you and the lender an idea of market value. The appraiser is to pull other properties that are similar in the market and that have recently sold and compare them to your home. Room count, square footage and home type are the 3 main things that are looked at. Then they compare things like decks, fireplace and market appeal. Obviously the process is more complex then this but this is the basics. When they are done making the comparison they come up with a value on your home. With a purchase it almost always comes in at the sales price. However with an appraisal and in this present market we are having tough times getting homes to appraise for what will help the financing work.
One major important thing is that the appraiser does not warrant the condition of the property...only the value.
Another 3rd party vendor as previously mentioned it the title company. The title company has an interesting job as they are warranting that the title work is free and clear. A title on a house is much like that of a car, but a lot longer as it entails the recorded history of real estate transactions for this property/home.
The title company has a few things that it needs to check out. The first is that they make sure that all of the recordings are correct so that there may not be another person out there claiming to have ownership. They check for liens and judgments against the property as well as potential easements and encroachments. It is their job to help correct any errors to protect you and the lender.
An encroachment is when part of your house/property or the neighboring property encroaches on the other. What this means is that somehow you are extended in to the next parcel of land. his could be because of a variety of reasons and is usually easily corrected.
A common easement is like when their is a utility running through your yard that is for major use. What this means is that you need to allow access to the company/person that has the recorded easement so that they can access it.
There are other scenarios that can pop up with title work but those are the 2 most common. Most people refer to title insurance as "peace of mind" insurance. It protects you against faulty title which is important. If the title company makes a mistake it is up to them to correct it for you or to take care of any issues due to financial loss based on their error.
Now there is a lot more that I have not covered on these items but having and idea or overview is always helpful to have. Any questions on this ....ask and I will answer.
The mortgage industry is in a huge state of flux right now. Part of it is that that it is waiting to see what will or will not happen with April 1 and compensation of loan officers. Right now large banks will be looking to make more money on each loan then they did before. How the heck is that good for consumers? What is hard is that the people that are attempting to create and enforce all of these new regulations do not really understand the business at hand. They think that they are doing all these good things when all they are doing is making things worse and hurting the consumer.
Whats next, regulating what a sales person selling suits can make or telling them how they can be paid?
The main idiots that messed things up are gone. With all of the new requirements for lenders as it pertains to NMLS there are many that could not be in the business and many that opted out of doing what was needed.
The industry itself has done a good job of cleaning things up and really does not need help from Mr. Dodd or Mr. Frank.
Rates are continuing to stay strong and getting a mortgage is still Simple-Fast and Hassle Free.
That's it for today and make sure to follow me either on facebook at http://www.facebook.com/pages/Toms-Wisdom-for-Mortgages-and-other-things/101866693225282
or on twitter @omsiguy.
Have a great week!
First off on the appraisal all it does it gives you and the lender an idea of market value. The appraiser is to pull other properties that are similar in the market and that have recently sold and compare them to your home. Room count, square footage and home type are the 3 main things that are looked at. Then they compare things like decks, fireplace and market appeal. Obviously the process is more complex then this but this is the basics. When they are done making the comparison they come up with a value on your home. With a purchase it almost always comes in at the sales price. However with an appraisal and in this present market we are having tough times getting homes to appraise for what will help the financing work.
One major important thing is that the appraiser does not warrant the condition of the property...only the value.
Another 3rd party vendor as previously mentioned it the title company. The title company has an interesting job as they are warranting that the title work is free and clear. A title on a house is much like that of a car, but a lot longer as it entails the recorded history of real estate transactions for this property/home.
The title company has a few things that it needs to check out. The first is that they make sure that all of the recordings are correct so that there may not be another person out there claiming to have ownership. They check for liens and judgments against the property as well as potential easements and encroachments. It is their job to help correct any errors to protect you and the lender.
An encroachment is when part of your house/property or the neighboring property encroaches on the other. What this means is that somehow you are extended in to the next parcel of land. his could be because of a variety of reasons and is usually easily corrected.
A common easement is like when their is a utility running through your yard that is for major use. What this means is that you need to allow access to the company/person that has the recorded easement so that they can access it.
There are other scenarios that can pop up with title work but those are the 2 most common. Most people refer to title insurance as "peace of mind" insurance. It protects you against faulty title which is important. If the title company makes a mistake it is up to them to correct it for you or to take care of any issues due to financial loss based on their error.
Now there is a lot more that I have not covered on these items but having and idea or overview is always helpful to have. Any questions on this ....ask and I will answer.
The mortgage industry is in a huge state of flux right now. Part of it is that that it is waiting to see what will or will not happen with April 1 and compensation of loan officers. Right now large banks will be looking to make more money on each loan then they did before. How the heck is that good for consumers? What is hard is that the people that are attempting to create and enforce all of these new regulations do not really understand the business at hand. They think that they are doing all these good things when all they are doing is making things worse and hurting the consumer.
Whats next, regulating what a sales person selling suits can make or telling them how they can be paid?
The main idiots that messed things up are gone. With all of the new requirements for lenders as it pertains to NMLS there are many that could not be in the business and many that opted out of doing what was needed.
The industry itself has done a good job of cleaning things up and really does not need help from Mr. Dodd or Mr. Frank.
Rates are continuing to stay strong and getting a mortgage is still Simple-Fast and Hassle Free.
That's it for today and make sure to follow me either on facebook at http://www.facebook.com/pages/Toms-Wisdom-for-Mortgages-and-other-things/101866693225282
or on twitter @omsiguy.
Have a great week!
Wednesday, March 2, 2011
Bouncey, Bouncey, Bouncey.....Rates....8
Interest rates and the bond market continue their never ending of bouncing around. Economists are all split on which they that they are headed but as long as employment is poor and gas prices continue to increase we will see consumers take more steps to the back of the line. If this is the case then we should say rates take another drop....perhaps a big one at that. Maybe Charlie Sheen has something to say on this?
You are in the home stretch on your home loan at this point. If you have a purchase you have a lot of people working for you to insure that you get to the closing table and have a smooth and successful closing.
The title company is busy making sure that the title work is clear and that there are no issues with easements or encroachments on the property as well as making sure all title transfers have been done successfully.
Your realtor is busy making sure that if the seller was to take care of anything prior to close..that it is being done and keeping you in the loop on this. They most likely are arranging a walk through for you prior to closing. This is especially important if the seller was to correct anything in the home or if your home is a new construction purchase.
And your lender is making sure that the approval is done and clean and that all parts match up successfully like the title and the appraisal.
If this were to be a refinance then you are working directly with just the lender and their game plan is still the same as it would be for a purchase.
Closing day arrives and the room is crowded on a purchase. Typically you will have the closers there for the buyer and seller (unless it is the same company) and the listing and selling agent (unless they are the same) along with the sellers and the buyers. In many cases your mortgage lender will be there as well to answer any questions that you may have in regards to the loan documents. The closing takes anywhere from 45 minutes to an hour and a half dependent on how many people are there, how many signatures are needed and how many questions are asked. A refinance closing normally should take about a half hour.
The title company closers go through all the paperwork with both sides and explain each document and collect your signatures. When the closing is complete....the money gets handed around. If the buyer needs money at closing they typically bring in a cashiers check made out to themselves and they sign it over to the title company. If the check is too much the title company cuts a check back to the consumer.
Now obviously this day is a little more complex then this but between the realtor(s)/title company and lender they should be making it a day that is Simple-Fast and Hassle Free.
More to come about the appriasal and the title company.
Have a great week!
You are in the home stretch on your home loan at this point. If you have a purchase you have a lot of people working for you to insure that you get to the closing table and have a smooth and successful closing.
The title company is busy making sure that the title work is clear and that there are no issues with easements or encroachments on the property as well as making sure all title transfers have been done successfully.
Your realtor is busy making sure that if the seller was to take care of anything prior to close..that it is being done and keeping you in the loop on this. They most likely are arranging a walk through for you prior to closing. This is especially important if the seller was to correct anything in the home or if your home is a new construction purchase.
And your lender is making sure that the approval is done and clean and that all parts match up successfully like the title and the appraisal.
If this were to be a refinance then you are working directly with just the lender and their game plan is still the same as it would be for a purchase.
Closing day arrives and the room is crowded on a purchase. Typically you will have the closers there for the buyer and seller (unless it is the same company) and the listing and selling agent (unless they are the same) along with the sellers and the buyers. In many cases your mortgage lender will be there as well to answer any questions that you may have in regards to the loan documents. The closing takes anywhere from 45 minutes to an hour and a half dependent on how many people are there, how many signatures are needed and how many questions are asked. A refinance closing normally should take about a half hour.
The title company closers go through all the paperwork with both sides and explain each document and collect your signatures. When the closing is complete....the money gets handed around. If the buyer needs money at closing they typically bring in a cashiers check made out to themselves and they sign it over to the title company. If the check is too much the title company cuts a check back to the consumer.
Now obviously this day is a little more complex then this but between the realtor(s)/title company and lender they should be making it a day that is Simple-Fast and Hassle Free.
More to come about the appriasal and the title company.
Have a great week!
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