Know Before You Owe

knowbeforeyouowe

The holidays are over, the sun is finally peaking out, and the buyers are making their grand debut from dormancy.

But as a buyer, knowledge is power. And The Consumer Financial Protection Bureau knows that. They have worked diligently to make the loan process more transparent. The new forms discussed below (the Loan Estimate and Closing Disclosure) were introduced to present less confusing information as to ensure consumers understand the terms of their loan and the fees they’re paying. Know before you owe!

To walk the walk, you have to talk the talk. Here is the new lingo and the new forms.

Let’s talk Terminology:

A lender is now a “Creditor”

The Good Faith Estimate (GFE) is now the “Loan Estimate” or LE for short.

HUD or Settlement Statement is now your “Closing Disclosure” or CD for short.

The GFE was meant to provide the buyer with a really good idea of what they’d be bringing to closing and the terms of their loan. But the rules behind its successor, the LE, are stricter, and provide a higher financial accuracy to the buyer. It includes interest rate, fees for both creditor and third-party services (ie: appraisals, title insurance, closing costs, etc.)

Before you do anything, shop around for a lender and get prequalified for a loan. There’s little advantage to visiting with a Real Estate Agent until you know what you can afford.

First you get prequalified, then you work with a Realtor who finds you the perfect home, and then comes your Loan Estimate.

SIX ELEMENTS TO GET THE LOAN ESTIMATE

  1. The consumer’s name
  2. The consumer’s income
  3. The consumer’s SSN to obtain a credit report (creditor shopping will NOT affect credit rating)
  4. Property address
  5. An estimate of the value of the property
  6. The mortgage loan amount sought

CLARIFY!

The prequal is NOT a Loan Estimate. If the consumer/buyer requests a preapproval or prequalification, and provides 5 of these 6 elements in their application, the creditor will provide the prequalification, but is not yet obligated to provide the LE.

Only when the consumer provides all six elements of the application, the creditor must get the LE to the consumer within 3 Federal Business days (if the creditor is open on Saturday, then Saturday counts). Once provided, the LE holds true for 10 days once a property has been determined.

The home does not actually have to be under contract at this point, but it greatly benefits the buyer if it is. Without knowing which title company the contract will be at, your creditor can’t know the exact fees. With the new LE, the liability and financial accuracy weighs much heavier on the creditor than it did in the past. So what if there are differences presented on your final CD than those on your LE?  There are zero tolerance fees, and fees that fall between a 10% tolerance. So if there is a difference between your CD and your LE, depending on which category the miscalculation falls under, the creditor may have to pay.

Moral is, sellers want strong buyers. Preapproval from a creditor shows just that, which is why it’s critical to get that first. Present that to your Realtor, house hunt, get under contract, and request the LE. Leave the rest to your happy and knowledgeable Realtor.

We’ll leave the changes to the consummation (the new term for closing) for a later discussion…

QUICK FACTS FROM 2015 COMPARED TO 2014

Demand was healthy in 2015, and the supply was enough to give the buyers options.

  • 1% increase in new listings since 2014
  • 7% increase in median sales price in 78418
  • -4.2% decrease in days on market
  • 15% new construction market share in 78418
  • 8% list to sale price ratio in 78418

Parents Push Through Day 1 of Back to School Schedules

Many schedules changed Monday for students heading back to school as summer comes to an end. Now, parents are left with the chore of planning around the new agendas. Some parents in the coastal bend told us what items were topping their back to school “To-do” lists and how the school year affects their routines.

“Running late, having to make them breakfast every morning,” a mother of two said.

Adam Young, a father of 5 agreed, saying a hot meal is a good way to send off the students.

“Eggs, oatmeal the whole thing, we just make sure that they have a good hot breakfast usually, you know something not too high in sugar,” Young said.

Young says adjusting schedules is just one thing on the back to school list that most parents, he works out, with at Flex Fit 24/7 can agree on.

“I schedule around picking my kids up and dropping them off at school,” Bert Ramos said.

Marlene Pineda followed that with her early bird wake up call now that she is a mother of three, including twins.

“I’m up at 6 o’clock in the morning, just really getting them out the door and the twins along with the ride,” Pineda said.

Rides to school are accompanied with heavy traffic around campus, causing another hiccup in the morning commute that parents try to combat.

“I dropped my daughter off who just started preschool and it was chaotic, it was crazy,” Annalaura Perez, mother of two, said.

“The school zones, the traffic, the school traffic it’s horrible,” another mom said.

Young says, “If you get up early enough and get them there soon enough not too bad, that the trick.”

For some parents though, the real trick is getting the kids out of bed before they can get the wheels in motion.

“My son doesn’t like getting up in the morning,” one mom added.

Overall, parents are happy to be in the early stage of their post-summer agendas.

“I think it gives me a little bit more free time to kind of get to work, do more things, maybe get to work out,” Pineda said.

“Be able to run errands without having to pull two kids in and out of the car,” another parent added.

via KrisTV