New Guidelines for C4HAP

admin — Thu, 11 Feb 2010 17:01:56 +0000

This just in from COR housing

1) C4HAP applicant receives an eligibility letter

2) They find a house

3) The realtor makes an offer with language that the purchase price shall be contingent on the appraised value of the property. Per the regulations, the purchase price must be 1% below the appraised value. The County has an appraiser that will be doing the appraisals on a 48-hour turn around. The County is paying for this appraisal and is used for the purpose of determine the purchase price. It does not replace the appraisal you will do for their primary mortgage. The lender will obtain their own appraisal just like normal.

Shop for best loan

admin — Tue, 03 Nov 2009 00:38:27 +0000

One of the very most important decisions first time buyers need to make prior to buying a home is financing. Because the cost of borrowing can vary quite a bit from one lender to another buyers should start shopping for a lender early in the buying process.

You should interview several lenders before deciding. Insist that the lenders you interview provide you with a detailed Good Faith Estimate (GFE) that itemizes all lender fees and charges and shows the Annual Percentage Rate (APR). The APR is the interest calculated after all loan related costs are taken into account.

In some cases the interest rate one lender quotes might appear to be low but after their fees are added on the APR may be considerably higher than another lender who has more reasonable charges.

Not only does the dollar amount of fees charged vary from lender to lender so do the types of charges they may ask you to pay. For example, one lender may charge you a 1% loan origination fee on an FHA loan and another lender may not charge a loan origination fee at all. In fact, I recently reviewed the charges one local mortgage broker was charging his clients and was shocked to see that in addition to a loan origination fee he was charging his clients a substantial “loan application fee”, an “admin fee”, an underwriting fee and a number of other extras that increased the buyers total cost to borrow by a tremendous amount. In this case the buyer/borrower had no idea that loan fees varied from lender to lender and assumed that whichever lender quoted lowest rate was the best choice.

The amounts we are talking about are not small figures either. These type of charges can be many thousands of dollars. Over $5,000 difference in lender charges between two lenders GFE’s on one recent quote I reviewed and that was on a loan of less than $150,000!

With that in mind here are a few tips.

Getting prepared early to shop for a loan;

Check your credit report for accuracy https://www.annualcreditreport.com/cra/index.jsp

Gather your financial records ( 2 years tax returns, W2’s, Pay Stubs, Bank Statements, IRA’s, 401k’s, Investment accounts and other monthly bills or income)

Avoid opening or applying for new lines of credit.

Start saving cash.

Consider postponing career or job changes.

Shopping for a loan;

Consult your Realtor or other trusted advisor for a list of reputable lenders that include Banks and Mortgage Brokers.

Schedule interviews with at least 3 lenders. (include both Banks and Mortgage Brokers)

Print out this HUD lender GFE comparison work sheet and take with you to lender interviews.

Insist on a printed detailed GFE (Should be based on the same purchase and loan amounts on all lenders estimates)

Ask the lender to explain the charges and who they benefit.

Keep GFE’s for later reference.

Don’t even consider using a lender if;

If lender refuses or attempts to avoid providing a detailed GFE

If lender encourages you to provide false or misleading information

If lender guarantees that the home you purchase will be worth more than purchase price in the future.

If lender attempts to persuade you to borrow more money than you can reasonably afford.

If lender insists that you use a particular Realtor or Broker.

Be honest and forthcoming with your financial and employment information when you are interviewing the lenders. Let them know you are shopping for a loan and don’t want credit history checked over and over. If you know your credit score let them know. If not, only have it ran once during the loan shopping process. A good lender should be able to provide you with an estimate based on your verbal information.

Keep in mind that the GFE’s you get during lender interview stage are for the purpose of selecting a lender to work with when you find your home. A new GFE that is specific to your purchase offer financing should be provided to you when you actually apply for the loan. The important thing is that both GFE’s have similar charges and fees. Keep your GFE and bring it with you to your signing at close of escrow to compare to your closing statement.

The advantages of interviewing, selecting and getting pre-approved by a lender early in the home buying process are many. Not only will you have an idea of what price home you can afford including total monthly payment amounts, loan costs, necessary down payment and required source of down payment funds but you will also be in a strong position to act quickly when you find the home you want to buy. In this market that can be very important.

In some cases the interest rate one lender quotes might appear to be low but after their fees are added on the APR may be considerably higher than another lender who has more reasonable charges.

Not only does the dollar amount of fees charged vary from lender to lender so do the types of charges they may ask you to pay.

For example, one lender may charge you a 1% loan origination fee on an FHA loan and another lender may not charge a loan origination fee at all. In fact, I recently reviewed the charges one local mortgage broker was charging his clients and was shocked to see that in addition to a loan origination fee he was charging his clients a substantial “loan application fee”, an “admin fee”, an underwriting fee and a number of other extras that increased the buyers total cost to borrow by a tremendous amount.

In this case the buyer/borrower had no idea that loan fees varied from lender to lender and assumed that whichever lender quoted lowest rate was the best choice.