Central Oregon Real Estate Info

Yesterday I wrote a blog on the new policy that was just announced by HUD for the $8,000 Tax Credit, in their latest Mortgagee Letter "MORTGAGEE LETTER 2009-1.  In it I advised everyone to read it for themselves and become familiar with it.  What I did not do in my blog yesterday was to further advise everyone to caution their clients about the SCAMS that will most likely emerge as a result of this latest change.

We have seen SCAMS pop up for everything prior to this, and I have no doubt that new SCAMS will pop up with creative ways to take advantage of those who do not follow sound advice, and would rather listen to those who will tell them what they want to hear instead.

• We have seen SCAMS devised to take advantage of those who are trying to refinance out of high interest loans. 
  
• We have seen SCAMS devised to take advantage of those who have fallen behind on their mortgages and are being promised loan programs that they can't possibly qualify for.
  
• We have seen SCAMS devised to take advantage of those who are trying to Modify their present mortgage.

So why would we not expect the Con Artist to come up with ways to make money off of this latest change to the $8,000 Tax Credit that is prime for the picking.

Make sure that your Buyers/Borrowers are dealing with reputable Lenders and Banks when it comes to this.  They need to stay away from Internet Lenders that no one has heard of.

It is likely that very few Lenders and Banks will participate in this program, because most are not set up for doing Bridge Loans, which this will be a form of.  I have not heard of anyone that has even considered participating in making these advances on the $8,000 Tax Credit available.

So as they use to say on the TV program Hill Street Blues "Lets Be Careful Out There"

 

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Info about the author:

George Souto is a Loan Officer who can assist you with all your FHA, CHFA, and Conventional mortgage needs in Connecticut. George resides in Middlesex County which includes Middletown, Middlefield, Durham, Cromwell, Portland, Higganum, Haddam, East Haddam, Chester, Deep River, and Essex. George can be contacted at (860) 573-1308 or gsouto@mccuemortgage.com

 

 

Good Faith Estimates  - Extremely important message below!!!

 

If you are a consumer looking to purchase or refinance, this is a must read. It could cost you thousands if you don't pay attention. This is not a threat, but a warning from someone that has over 16 years of experience in the mortgage industry.

When shopping for a mortgage, even if shopping with more than 2 lenders, you want to get a good faith estimate from everyone that you speak to.

 

 

So, here is my pet peeve.  This is a major red flag -  if you speak to a loan officer, on the phone or in person, and they didn't offer you a good faith estimate, don't walk, Run!!!

The Good Faith Estimate is an over abused term and can be misleading. If the loan officer qualifies you for a mortgage, no matter if its a FHA loan or a conventional loan, you should receive one in a few hours. In reality, if the loan officer qualifies you and tells you a rate, a payment, and your total costs, they should be able to give you that good faith estimate in a matter of minutes. Think about it, they had to do this already in order to give you those figures.  There is no excuse. Sure, things happen, but just being busy is not good enough. Unless they specifically tell you that they will give it to you the next day. This can happen, but other than that, if they dont communicate this with you, no excuse. And this could be indicative to how your loan process will go.

Let me ask you this. If you are shopping for a car, don't you want to see your payment, interest rate, and total costs?  I know I would. If you have to keep asking for a good faith estimate and it's been 3 days, major red flag.

 

Overall, it doesn't matter if you are applying for a FHA loan, a conventional loan, or any other type of mortgage.  If you have to beg for a good faith estimate, you are just asking for trouble in most cases.

 

 

 

 

THE GOOD FAITH ESTIMATE

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

So, what is a good faith estimate? Its an estimate of all your costs associated with buying or refinancing your home. But here is the catch. There are some costs that are known costs and not just estimates. These would be the lenders fees. The lender fees are all fees that are under lines 801 to 823. I enlarged this section below for you.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three things that you want to look for when you first look at your GFE.

• Look at the loan program and make sure this is the program that you want. If it was an adjustable, it would say differently.  This would fall under the term of the loan.

• Look at the mortgage rate. Make sure this is what you discussed when speaking to your loan officer. (Up top, middle of page, yellow highlight)

• The 3rd issue are the fees. As I mentioned above, everything in section 801 to 823 would be the lenders fees or anything the lender is going to charge you. (left hand column with highlighted items) Don't ever be fooled if one lenders fee is higher than the other. You still need to compare the mortgage rate.

(Speak to your tax accountant to make sure what can be written off and what cant. But typically just the points can be written off)

 

 

What not to do when comparing good faith estimates.

• Don't compare total fees at bottom of the GFE, which I will explain why below.

• Just dont compare the APR of the loan. (explained here)

 

 

 

 

Conclusion:  Again, don't always shop and ask for total fees. Compare the lenders fees the most. In regards to your escrows, each state is different. I highlighted this in red. Your property taxes are paid either quarterly, twice a year, or once a year. I have seen some loan officers sometimes not show enough for your escrows in regards to the property taxes.  Its very easy for a loan officer to say at closing, ˜these aren't my fees, so all I can do is give an estimate.  Word of advice, yes, its an estimate. But I have seen some loan officers estimate less to make the overall cost look cheaper. And just be careful, because some of these figures are not worth the paper that they are written on. It's just that, an estimate based on good faith. Make sure that you always speak with a Mortgage Professional.  And don't shop yourself right out of the market.

 

One other thing, if you have 3 good faith estimates in front of you, always go back to the person that you had the best feeling with, that you are comfortable the most with, and share the other 2 with them. Just don't run to the person with the best rate and or fees. I always like my clients to come back to me no matter what. I might be able to point something out to them. And this next topic must be discussed when receiving a GFE, otherwise this Good Faith doesn't mean squat.  Locking or floating my mortgage rate !!!!

 

Lastly... if you are going to shop rate & costs, ALWAYS shop on the same day !!!  Rates change daily...

 

 

 

UPDATE :  The laws in some states are different, when a good faith estimate must be given. In Paul McFadden's example, comment #15, they have 3 days from the day they pull credit. According to RESPA, the lender has 3 days from the time of application. When just casually shopping, there is no time period or law.

In regards to my example, with the rate and points, this is just an example. Besides, not all rates or good faith estimates come with points. And I don't charge fees. But there is a cost of doing business with any lender or bank out there.

 

 

 

 

 

- FHA Loans - USDA Loans - VA Loans -

- Energy Efficient Mortgages - 

- Conventional Loans - 203 k loans -

- Mortgages -

 

Experience & Knowledge at its BEST !!!

 

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For more information on FHA loans, please go to this link. The FHA Expert

For more information about the 2009 Tax Credit for First Time Homebuyers : 2009 Tax Credit

For important mortgage insight to watch for, please read : Consumers need to be aware of these Red Flags !!!!

Copyright © 2009 by Jeff Belonger