Monthly Archives: October 2015

Federal Programs

What Types Of Closing Costs Are Associated With FHA-Insured Loans?

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While this video simplifies things to help you remember, except for the addition of an FHA mortgage insurance premium, FHA closing costs are similar to those of a conventional loan.

As of 2013, the FHA requires a single, upfront mortgage insurance premium equal to 2.25% of the mortgage to be paid at closing (or 1.75% if you complete the HELP program).

This initial premium may be partially refunded if the loan is paid in full during the first seven years of the loan term.

After closing, you will then be responsible for an annual premium – paid monthly – if your mortgage is over 15 years or if you have a 15-year loan with an LTV greater than 90%.

Federal Programs

What Are The Steps Involved In The FHA Loan Process?

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The video explains the steps in FHA loans in more visual terms. With the exception of a few additional forms, the FHA loan application process is similar to that of a conventional loan.

With new automation measures FHA loans may be originated more quickly than before. And, if you don’t prefer a face-to-face meeting, you can apply for an FHA loan via mail, telephone, the Internet, or video conference.

Federal Programs

How Can The FHA Assist Me In Buying A Home?

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Remember these points from the video:

  • The FHA works to make home-ownership a possibility for more Americans.
  • With the FHA, you don’t need perfect credit or a high-paying job to qualify for a loan.
  • The FHA also makes loans more accessible by requiring smaller down payments than conventional loans.

In fact, an FHA down payment could be as little as a few months rent. And your monthly payments may not be much more than rent.

CFPB, Resources, TRID TILA-RESPA Integrated Disclosure

Can the TRID 3-day rule possibly delay your closing?

One of the regulations associated with the new TRID forms is a 3-day rule. The 3-Day rule mandates borrowers MUST receive the Closing Disclosure 3-days before the closing date. This new rule gives consumers the opportunity to review the closing disclosure and ensure all information is correct and correlates with the Loan Estimate.

However, what happens if any changes need to be made?

The infograph below explains three situations that would require a new closing disclosure and thus, delay your closing.

3 Day Rules

Title and Closing

What Makes Up Closing Costs?

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What you’ll see in this video is, there may be closing costs customary or unique to a certain locality but closing costs are usually made up of the following:

  • Attorney’s or escrow fees (Yours and your lender’s if applicable)
  • Property taxes (to cover tax period to date)
  • Interest (paid from date of closing to 30 days before first monthly payment)
  • Loan Origination fee (covers lenders administrative cost)
  • Recording fees Survey fee First premium of mortgage Insurance (if applicable)
  • Title Insurance (yours and lender’s)
  • Loan discount points
  • First payment to escrow account for future real estate taxes and insurance
  • Paid receipt for homeowner’s insurance policy (and fire and flood insurance if applicable)

And any documentation preparation fees.

Selling a Home, Title and Closing

What Do I Get At Closing?

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As we show you in this video:

  • The Closing Disclosure, which itemizes services provided and the fees charged; it must be given to you three days before closing.
  • A copy of your Mortgage Note
  • Your Mortgage or Deed of Trust
  • The Binding Sales Contract prepared by the seller; your lawyer should review it

And the keys to your new home!

Title and Closing

What Can I Expect To Happen On Closing Day?

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While this video simplifies things to help you remember: you’ll present your paid homeowner’s insurance policy or a binder and receipt showing that the premium has been paid. The closing agent will then list the money you owe the seller (remainder of down payment, prepaid taxes, and so on) and then the money the seller owes you unpaid taxes and prepaid rent, if applicable.

The seller will provide proofs of any inspection, warranties, and so on. Once you’re sure you understand all the documentation you’ll sign the mortgage, agreeing that if you don’t make payments the lender is entitled to sell your property and apply the sale price against the amount you owe plus expenses.

You’ll also sign a mortgage note, promising to repay the loan. The seller will give you the title to the house in the form of a signed deed. You’ll pay the lender’s agent all closing costs and, in turn, he or she will provide you with a settlement statement of all the items for which you have paid.

The deed and mortgage will then be recorded in the state Registry of Deeds and you will be a homeowner.

Title and Closing

What Are Real Estate Commissions?

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Like the video says – real estate agents aren’t paid by the hour! They’re paid a percentage of the purchase price in a successful real estate transaction.

When one agent represents the sellers and another represents the buyers the commission is typically split between them.
In the US, real estate commissions are commonly 6% of the transaction usually 3%/3% when split.

No government or industry body sets commission rates.  Legally, commission rates ARE negotiable.  However, remember that agents only earn their commission on successful sales.

Consider the work you want them to do for you to evaluate the value you should put on the commission they earn.

Title and Closing

Title Insurance Explained Visually

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What is title insurance and why should any buyer get it when purchasing a home (single family, townhouse, condo, apartment, or whatever format your home purchase takes)? Doesn’t the attorney or settlement company handling the closing see to it that you have a clear title? Isn’t this just another way for someone to siphon a few coins off a real estate transaction?

Title insurance prevents the property owner from suffering financial loss if, at any time during his ownership of the property, someone comes along who can show that they have full, or partial, ownership of the property instead.

A careful title search is done at the time property changes hands. On rare occasions mistakes are made anyway. Property can change hands in a number of ways including by deed, by will and by court action. Typically, these proceedings are recorded in different places. Searching the history of ownership to be sure nothing has fallen through the cracks is a tedious job that requires alertness, intelligence, and skill.

It is very likely that the value of your property will go up over the years. As time passes, these elements are likely to result in your home equity’s being your largest asset. Just how devastating would it be if you eventually discovered that someone else owned what you’d always thought was your home?

Do yourself a favor. When you buy a home, buy title insurance.  And watch the video to understand the essentials.