Mortgage & Finance

Interest rates may go down a bit again but right now they are super low. Here are some numbers from Freddie Mac

I know from experience that when rates go up the smallest amount seems to affect home sales. When they go down people start refinancing.

Will rates go down again this week? We shall see.

Most home buyers use some kind of financing to buy a home. Over the last 15 years or so the home buying process has changed because

of technology. The shopping process is easier because of the internet. It is easier to do some research and to learn about real estate and about a particular home. There are online home valuations and information about what the previous owner paid for the home and more.

The process of getting a loan to buy a home hasn’t changed much and most of it is shrouded in mystery. Home buyers fill out forms like crazy and send information to the lender.

Once a buyer has a contract to purchase a home the process goes into a kind of black hole. The property is appraised and the process goes to “underwriting”. Sometimes we get to talk to the underwriter but most of the time we don’t get to and they always seem to be on vacation the week of the closing.

When I work with home buyers or sellers I have no control over the mortgage process and a big part of my process is to constantly ask for updates. It seems like it all works out most of the time.

During the great recession and housing market crash financing “fell through” a lot more often than it does these days.

Often when something does go wrong it is people like me who become the “face” of the purchase and end up absorbing the blows and explaining what went wrong even though we do not have any control over the process.

Working with a loan officer who doesn’t return phone calls or give updates can turn a positive home buying or selling experience into a hellish one.

I am looking forward to the day when consumers will start to benefit from today’s technology when they want to borrow money. A day when the process is transparent and the consumer is in charge. There is plenty of room for better customer service in mortgage and finance.

Chose your lender wisely. Get recommendations from real estate agents and friends, relatives, neighbors and co-workers who have recently purchased homes.

Getting an offer accepted for the purchase of a home is just one step in a process. The purchase price of the house is actually more than the amount the buyer offers when closing costs are factored in.

Real estate agents don’t create closing costs. There is a state mortgage registration tax of0.0023 and them add on another .0001 for the state environmental response fund.

Some real estate companies tack on an extra few hundred and there are closing and lending fees, and a loan origination fee. There are prorated property taxes and an insurance binder.

Real estate agents who work with buyers get paid by the listing broker, who gets paid by the seller, but not until the sale closes.

There are some who say a buyer’s agent services are free and others who contend that the fee is baked into the price of the house. Either way, a buyers agent can be a great investment if she has a lot of experience, can save you money and help you make a wise choice when buying a house.

Home buyers using any kind of financing will get a good faith estimate that shows fees and closing costs. These good faith estimates must closely match the settlement statement the buyer will receive three days before the closing.

Home buyers should ask their mortgage professional how much cash they will need in addition to the down payment to cover closing costs.

Sometimes buyers finance their closing costs by having them rolled into the loan. Sometimes buyers ask sellers to pay the closing costs which doesn’t work well in multiple offer situations.

There are programs that offer assistance with downpayment and closing costs. I had one client this summer who brought a couple hundred dollars to the closing. The rest of the funds came from a kind of low-interest second mortgage.

The buyer has a place to live for less than what he would have to pay for rent and he still has funds in his savings account.