If you are looking to complete a purchase or sale of a home, you shall no longer be kept in the dark when it comes to its closing expenses, thanks to the changes made in the RESPA this year. Loan originators seem to be opposed but it should help even the playing field and help buyers avoid the all too familiar bait and switch policy!
These changes require lenders to completely disclose every single closing expense, including expenses related to getting loans and any estimated expense for settlement, title insurance and the like.
Closing process forms have also gone through changes to make things easier for consumers to fully understand these costs and to compare them with the final closing expenses. This has encouraged consumers to shop around and compare costs from different lenders prior to making a mortgage choice.
Unfortunately, these offered estimates are usually only binding for ten days, so buyers only get several weeks to complete necessary tasks like keeping settlement services and reviewing title reports prior to closing. It would therefore be a necessity to act fast and meet deadlines within contracts of sale.
Because of this, every home buyer should work closely with an expert in real estate to come up with the best strategies in finding the ideal closing service vendor in no time.
Several Tips You Should Follow:
1. Since local customs and laws tend to differ, your agent might strongly recommend you to get optional services like home warranties and inspections. Ask and make sure it makes sense for your purchase.
2. Buyers who are smart can save tons of money just by finding personal providers of closing expenses to retain quality at a lower cost but this can lead to delays and make it difficult to close on time.
3. Overall, it comes down to the old rule that you just need to read and understand everything you are signing. The item that really concerns me is lenders will have to offer buyers a good faith estimate and it has to remain the same all the way through to the end of the loan. Any unexpected expense will require the loan to go back in to underwriting and cause additional delays.
Make sure you do your homework and find a great mortgage company to work with! Please view the RESPA website for additional information.
I think this is going to be hard to adjust to for a couple months but it’s a great thing for a buyer in today’s market. Gives them confidence that what they are told they are paying is going to be exactly that.
Change is good and the more information we can provide to the consumer, the better. This I believe will be even more valuable to the first time home-buyer.
This change is giving mortgage people some angst, but in the long run it should be good for their business. Reputable companies will not loose business to the “bait and switch” tactics of some companies.
.-= Wayne Pruner´s last blog ..How do Reverse Mortgages work? =-.
Some people might have difficulty in adjusting with changes made by authorities but i’m sure that they can adapt to the changing rules in the long run. This is one of the tactics and strategies for the betterment and development. First time home buyers would benefit a lot from this.
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I gree with reahomestate comment, there are people that do have problems adjunting to changes made by he authority but I don’t see that for sure this will be 100% in benefit of th first time home buyers, trully hope it will.
.-= Buenos Aires real estate´s last blog ..Punta del Este – Seaside Luxury Property =-.
Some changes in the rules can sometimes hurt the business but this one will surely have some good benefits in the future, as what you’ve said buyers will be assured of that what their paying is the right amount.
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What a great way to level the playing field for buyers. This new change will take some time to get used to, but will help buyers (some of which are totally clueless) to help negotiate through the buying process.
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These changes have put an excessive level of hardship on lenders and it has come at little value to buyers. The biggest issue with the lending industry is Yield Spread Premium (YSP). YSP is in a nut shell the ability for the loan originator to gain extra commission by having the buyer accept a higher interest rate. Now sure in the past new legislation requires a mortgage broker to disclose YSP, but it still allow banks and mortgage banks the ability to not have to disclose this additional commission since they have their own rate sheets.
If we were going to have any new regulation it should have been to give loan originators a fiduciary responsibility to the buyer and to disallow YSP by either brokers or bankers. This would have done wonders in the way of reducing inaccurate disclosure of loan fees and encouraged loan fraud. Along with protecting the consumer financially.
I would also like to see it become a requirement that for any buyer to gain a government subsidized loan or a loan from a government sponsored institution the buyer has to take a home ownership course.
.-= James Wheelock@Houston Homes For Sale´s last blog ..Renoir Lofts Houston =-.
This is good new rules that being implementing but it may take some time to be fully beneficial
I have come across such real estate proprietors and agents who are running advertisement like “No fee apartment available” in their city. But once again it is their bait and switch policy to drag innocent customers and finally compelling them to buy apartments with high brokerage fees. But RESPA new guidelines would bring some transparency and provide justified results for buyers. I think corporate Serviced Apartments are free from such misrepresentations of charges.
Its a good rule being implemented. But it’ll definitely take time.
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I’m glad lenders will need to disclose all costs to the client, so they know what they’re paying and can’t be tricked. It’s always a good idea for mortgage clients to pay close attention to what they are signing, like you’ve mentioned, and also bring a friend or family member along to help understand what they are signing. Two heads are better than one.
@Cape Villas, i agree, but keep in mind the real estate industry is rebounding a little bit so that’s going to impact individual thoughts