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Welcome to the TexasFile Mortgage and Property Title Video Library!
According to recent research by Zillow, the total value of every home in the U.S. is $33.6 trillion, nearly as much as the GDP of the two largest global economies combined - the U.S. and China. (source: Zillow)
A home purchase is the single largest financial investment for most people in the United States. Along with such a large investment come plenty of questions.
We provide this video library to help answer some of these questions. Whether you are a home buyer or seller, a mortgage servicing company or anyone involved in land and property title search, the following videos should help your understanding of the real estate and mortgage industry.
- Determining Your Housing Needs
Like the video shows, your home should fit the way you live, with spaces and features that appeal to the whole family. Before you begin looking at homes make a list of your priorities - things like location and size.
- Should the house be close to certain schools? your job? to public transportation?
- How large should the house be?
- What type of lot do you prefer?
- What kinds of amenities are you looking for?
- Start The Home-Buying Process!
Remember these pointers from the video: start by thinking about your situation.
- Are you ready to buy a home?
- How much can you afford in a monthly mortgage payment?
- How much space do you need?
- What areas of town do you like?
- How Lenders Decide Your Maximum Loan
As you will see in the video, the lenders consider your debt-to-income ratio, which is a comparison of your gross (pre-tax) income to housing and non-housing expenses. Non-housing expenses include such long-term debts as car or student loan payments, alimony, or child support. According to the FHA, monthly mortgage payments should be no more than 29% of gross income, while the mortgage payment, combined with non-housing expenses, should total no more than 41% of income. Lenders also consider cash available for down payment and closing costs credit history and the rest of your financial picture when determining your maximum loan amount.
- Purchasing Vs Renting A Home
Like the guy in the video says, the two do not really compare at all. The one advantage of renting is being generally free of most maintenance responsibilities. But by renting, you lose the chance to build equity take advantage of tax benefits and protect yourself against rent increases.Also, you may be at the mercy of the landlord for housing. Owning a home has many benefits. When you make a mortgage payment, you are building equity increasing YOUR net worth. Owning a home also qualifies you for tax breaks that assist you in dealing with your new financial responsibilities like insurance, real estate taxes, and upkeep which can be substantial. But given the freedom, stability, and security of owning your own home they are worth it.
- Why Use a REALTOR?
A state license is required to sell real estate. But roughly half of those licensed take the additional step of becoming a REALTOR. As we show you in this video, only members of the National Association of Realtors - NAR - are entitled to use that registered trademark and call themselves a REALTOR. As members, they adhere to a strict Code of Ethics and have access to classes, seminars and certification. Their aim is to be experts in their community aware of real estate trends and local and neighborhood issues. They apply that expertise to help buyers and sellers succeed. You can find a certified REALTOR by looking in local sources asking around or searching here.
- Learn Your Community Resources
The video puts this in more visual terms, but basically, contact the local Chamber of Commerce for promotional literature or talk to your real estate agent about welcome kits, maps, and other information. You can get information about school systems by contacting the city or county school board or the local schools. You may also want to visit the local library. It can be an excellent source for information on local events and resources and the librarians will probably be able to answer many of the questions you have.
- Walkthrough - What To Look For
As we show you in this video, in addition to comparing the home to your minimum requirement and wish lists use the HUD Home Scorecard and consider the following:
- Is there enough room for both the present and the future?
- Are there enough bedrooms and bathrooms?
- Is the house structurally sound?
- Do the mechanical systems and appliances work?
- Is the yard big enough?
- Do you like the floor plan?
- Will your furniture fit in the space?
- Is there enough storage space?
- Does anything need to repaired or replaced?
- Will the seller repair or replace the items?
- Keeping Track Of Homes
There are some great tips in this video, like: if possible, take photographs of each house: the outside, the major rooms, the yard and extra features that you like or ones you see as potential problems. Write things down as you go. And do not hesitate to return for a second look. Use the HUD Home Scorecard (www.hud.gov/buying/checklist.pdf) to organize your photos and notes for each house.
- What To Ask When Looking At Homes
As you will see in this video, many of your questions should focus on potential problems and maintenance issues. Does anything need to be replaced? What things require ongoing maintenance like paint, roof, heating and AC, appliances and carpet? Also ask about the house and neighborhood focusing on quality of life issues. Be sure the sellers or real estate agents answers are clear and complete. Like the video says, ask questions until you understand all of the information theyve given. Making a list of questions ahead of time will help you organize your thoughts and arrange all of the information you receive. The HUD Home Scorecard can help you develop your question list and keep a record for each potential home.
- Older Vs Newer Homes
Well, as this story shows, there isnt a definitive answer to this question. You should look at each home for it is individual characteristics. Generally, older homes may be in more established neighborhoods offer more ambiance and have lower property tax rates. People who buy older homes, however shouldnt mind maintaining their home and making some repairs. Newer homes tend to use more modern architecture and systems are usually easier to maintain and may be more energy-efficient. People who buy new homes often do not want to worry initially about upkeep and repairs.
- What Is Earnest Money?
Like the video shows, earnest money is money you put down to demonstrate your seriousness about buying a home. It must be substantial enough to demonstrate good faith and is usually between 1-5% of the purchase price though the amount can vary with local customs and conditions. If your offer is accepted the earnest money becomes part of your down payment or closing costs. If the offer is rejected, your earnest money is returned to you. If you back out of a deal, you may forfeit the entire amount.
- What Do Home Inspectors Do?
As we show you in this video, an inspector checks the safety of your potential new home. Home Inspectors focus especially on the structure, construction and mechanical systems of the house and will make you aware of only repairs that are needed. The Inspector does not evaluate whether or not you are getting good value for your money. Generally, an inspector checks (and gives estimates for repairs on):
- the electrical system
- plumbing and waste disposal
- the water heater
- insulation and ventilation
- the heating and AC system
- water source and quality
- the potential presence of pests
- the foundation, doors, windows, ceilings, walls, floors, and roof.
- What About Flood Plains?
A flood plain is an area of land adjacent to a stream or river that experiences flooding during periods of high discharge. Watch this video and it will make sense. If you live in a flood plain lenders will require that you have flood insurance before lending any money to you. But if you live near a flood plain, you may choose whether or not to get flood insurance coverage for your home. Check the National Flood Insurance Program site atFloodSmart.govfor more information. And work with an insurance agent to construct a policy that fits your needs.
- What Are Home Warranties?
You'll see some pictures in this video to help you remember later, but essentially, home warranties offer you protection for a specific period of time, such as one year, against potentially costly problems like unexpected repairs on appliances or home systems which are not covered by homeowners insurance. Warranties are becoming more popular because they offer protection during the time immediately following the purchase of a home a time when many people find themselves cash-strapped.
- Final Walkthrough Warnings
Well, as this story shows, this will likely be the first opportunity to examine the house without furniture giving you a clear view of everything. Check the walls and ceilings carefully as well as any work the seller agreed to do in response to the inspection. Any problems discovered previously that you find uncorrected should be brought up prior to closing. It is the sellers responsibility to fix them.
- What Is A Rate Lock?
Mortgage rates change constantly through an unpredictable combination of government policies and economic conditions. This video explains the common term rate lock. A Rate Lock is a guarantee that a lender will honor a specific combination of interest rates and points for a given period of time . A lock protects a buyer from rate increases but commits them to a higher rate if mortgage rates fall below the locked rate. As of 2014, rate locks aren't usually an option until a purchase offer for a specific property - new-home or resale - has been accepted by the seller. The borrowers credit score, the loan-to-value ratio property type, location and other factors plus, of course, market rates and market conditions will also affect rate-lock decisions. Decide whether to lock or float based on your capacity for risk and your best rational knowledge about construction and closing schedules. If your rate lock expires an extension might be available but both you and the lender will be looking at current mortgage rates to decide the best option.
- What Is A Mortgage?
The original phrase mort gage translates as death pledge! But as this video explains, a mortgage is a loan obtained to purchase real estate. The mortgage itself is a lien - a legal claim on the home or property that secures the promise to pay the debt. All mortgages have two features in common: principal and interest. The principal is the amount you are borrowing which is secured by the lenders claim on the property. The interest, usually stated as the percentage rate is the additional amount paid for borrowing. Mortgage interest is compounded - interest on interest, over time.
- What is A Qualified Mortgage?
As this video explains, Federal laws put into effect in 2014 and supervised by the Consumer Financial Protection Bureau define lending practices and loan terms for a new category called Qualified Mortgages. They provide stable loan features for consumers and improve legal protection for lenders who follow the guidelines. These guidelines require lenders to assess each borrowers ability to repay their mortgage loan. As of 2014, guidelines require that a borrowers monthly DEBT - including mortgage - be no higher than 43% of their monthly gross INCOME The laws also define unacceptable loan terms: interest-only loans terms over 30 years negative-amortization loans that increase principal over time most balloon loans do not meet the Qualified Mortgage guidelines. The laws aim to provide consumers with objective guidance about reasonable debt from the CFPB and in return, to grant lenders who follow that guidance with higher levels of protection from lawsuits. Ask your lender about Qualified Mortgage options for your home purchase.
- What Is Loan-To-Value (LTV)?
While this video simplifies things to help you remember, the loan to value ratio is the amount of money you borrow compared with the price or appraised value of the home you are purchasing. Each loan has a specific LTV limit. For example: With a 75% LTV loan on a home priced at $100,000 you could borrow up to $75,000 (75% of $100,000) and would have to pay $25000 as a down payment. The LTV ratio reflects the amount of equity borrowers have in their homes. The higher the LTV the less cash homebuyers are required to pay out of their own funds. So, to protect lenders against potential loss in case of default, higher LTV loans (80% or more) usually require mortgage insurance policies.
- How Large A Down Payment Do I Need?
There are mortgage options now available that only require a down payment of 5% or less of the purchase price. You'll see some pictures in this video to help you remember later - the larger the down payment, the less you have to borrow and the more equity you will have. Mortgages with less than a 20% down payment generally require a mortgage insurance policy to secure the loan. When considering the size of your down payment consider that you will also need money for closing costs moving expenses, and - possibly - repairs and decorating.
- What Is Ability To Repay?
What are the Ability to repay rules about? In a nutshell, as this video shows, new laws require lenders to make a good-faith assessment of a borrowers capacity to pay back their loan over time. It is a longer-term view that goes beyond immediate income, debt and credit rating. These new Federal laws- supervised by the CFPB - require lenders to ask more questions - about income, assets, employment, credit history, and monthly expenses - as they relate to the proposed loan. For example, a lender offering a mortgage with a low initial rate must try to assess how a borrower will handle the later, higher rate as well. If you are applying to borrow ask whether the program you are considering is a Qualified Mortgage Ability-to-repay rules are built in to loans that meet Qualified Mortgage guidelines.
- First-Time Mortgages?
Yes. Like the video shows, lenders now offer several affordable mortgage options which can help first-time home buyers overcome obstacles that made purchasing a home difficult in the past. Lenders may now be able to help borrowers who do not have a lot of money saved for the down payment and closing costs, have no or a poor credit history, have quite a bit of long-term debt, or who have experienced income irregularities.
- The Main Types Of Mortgages
As you will see in the video, a lower interest rate allows you to borrow more money than a high rate with the some monthly payment. Interest rates can fluctuate as you shop for a loan so ask lenders if they offer a rate lock-in which guarantees a specific interest rate for a certain period of time. Remember that a lender must disclose the Annual Percentage Rate (APR) of a loan to you. The APR shows the cost of a mortgage loan by expressing it in terms of a yearly interest rate. It is generally higher than the mortgage interest rate because it also includes the cost of points, mortgage insurance and other fees included in the loan.
- How Interest Affects Mortgages
As you will see in the video, a lower interest rate allows you to borrow more money than a high rate with the some monthly payment. Interest rates can fluctuate as you shop for a loan so ask lenders if they offer a rate lock-in which guarantees a specific interest rate for a certain period of time. Remember that a lender must disclose the Annual Percentage Rate (APR) of a loan to you. The APR shows the cost of a mortgage loan by expressing it in terms of a yearly interest rate. It is generally higher than the mortgage interest rate because it also includes the cost of points, mortgage insurance and other fees included in the loan.
- Fixed-Rate Mortgage Advantages
For both, as we show you in this video, compared with other options, with fixed rates, housing costs will not be affected by interest rate changes and inflation. With A 30-Year Term: In the first 23 years of the loan more interest is paid off than principal meaning larger tax deductions. As inflation and costs of living increase mortgage payments become a smaller part of overall expenses. With A 15-year Term: Loan is usually made at a lower interest rate. Equity is built faster because early payments pay more principal. And the loan is paid off earlier. Compare payments, principal and interest totals to make a decision.
- Key Factors In Mortgage Payments
Well, as this story shows, the amount of the down payment the size of the mortgage loan, the interest rate the length of the repayment term and payment schedule will all affect the size of your mortgage payment. In bullets:
- down payment
- loan size
- interest rate - fixed or adjustable
- repayment term - how long
- payment schedule - how often
- What Does A Mortgage Cover?
The monthly mortgage payment mainly pays off principal and interest. But most lenders also include local real estate taxes homeowners insurance, and mortgage insurance, if applicable. If you are refinancing compare what is and isn't included in your financing options. Watch this video and it will make sense.
- What Are Discount Points?
Discount points allow you to lower your interest rate. While this video simplifies things to help you remember, points are essentially prepaid interest with each point equaling 1% of the total loan amount. Generally, for each point paid on a 30-year mortgage the interest rate is reduced by 1/8 (or.125) of a percentage point. When shopping for loans, ask lenders for an interest rate with 0 points and then see how much the rate decreases with each point paid. Discount points are smart if you plan to stay in a home for some time since they can lower the monthly loan payment. Points are tax deductible when you purchase a home and you may be able to negotiate for the seller to pay for some of them.
- What Is Mortgage Insurance?
Like the video shows, mortgage insurance is a policy that protects lenders against some or most of the losses that result from defaults on home mortgages. Like home or auto insurance, mortgage insurance requires payment of a premium, is for protection against loss, and is used in the event of an emergency. If a borrower cant repay an insured mortgage loan as agreed, the lender may foreclose on the property and file a claim with the mortgage insurer for some or most of the total losses. You generally need mortgage insurance only if you plan to make a down payment of less than 20% of the purchase price of the home. The FHA offers several loan programs that may meet your needs.
- What Is PMI?
This video tells you about it all. PMI stands for Private Mortgage Insurance or Insurer. These are privately-owned companies that provide mortgage insurance. They offer both standard and special affordable programs for borrowers. These companies provide guidelines to lenders that detail the types of loans they will insure. Lenders use these guidelines to determine borrower eligibility. PMIs usually have stricter qualifying ratios and larger down payment requirements than the FHA but their premiums are often lower and they insure loans that exceed the FHA limit.
- What Is Prime?
The Prime Lending Rate - sometimes just called Prime - is the interest rate that banks charge each other for overnight loans. Some consumer rates - like ARMs - are set in relation to Prime. In the US, Prime is affected by the Federal Reserve lending rate to banks; historically, Prime is about 3 percent above the Fed rate. The video shows an example. The Federal Reserve loans to Bank A at 1% Bank A loans to Bank B at 4% Both banks - A & B - will recalculate variable-rate loans like ARMs on that 4% Prime figure. ARM rates are frequently defined as % above Prime - that gap is usually called the margin or spread. Just remember those 3 layers in Prime: Federal Reserve Bank A Bank B And finally, YOUR rate.
- What Is Equity?
Equity is the value YOU own in property such as a house. It is the difference between whats OWED and what the property is WORTH in the current market. The example this video shows - you have a house worth $300,000 today and you owe the bank $200,000. Your equity would be $100,000. If the house is valued at $500,000 in five years, and you still owe $150,000 your equity will be $350,000. Equity grows if the property value goes up or if the amount owed goes down. The key thing to remember, simple as it sounds, is that you own increases in value. The banks loan doesnt go up if the homes value goes up. Equity in a home can be used as collateral for loans but a house is not a piggy bank. Home equity can become a key financial asset over time; treat it wisely.
- Can I Pay Off Early?
Usually, Yes. Like the guy in the video says, by sending in extra money each month or making an extra payment at the end of the year you can accelerate the process of paying off the loan. When you send extra money, be sure to indicate that the excess payment is to be applied to the principal and keep records. Remember that payment applied to loan principal is not tax-deductible. Most lenders allow loan prepayment, but some loans may have prepayment penalties. Ask your lender for details.
- Key Steps To Secure Your Loan
You'll see some pictures in this video to help you remember later, but the first step in securing a loan is to complete a loan application. To do so, you will need the following information.
- Pay stubs for the past 2-3 months.
- W-2 forms for the past 2 years.
- Information on long-term debts.
- Recent bank statements tax returns for the past 2 years.
- Proof of any other income.
- Address and description of the property you wish to buy.
- A sales contract on the home you want to buy.
- What is Debt-To-Income?
Measuring your existing debts against your existing income is one part of a lenders required assessment of your ability to repay a loan. Like the video says: debts are existing financial commitments; a car payment is a debt a grocery bill is not. To calculate your debt-to-income ratio add up your monthly debt payments and divide them by your GROSS monthly income. (Gross income is generally the amount of money you earn BEFORE taxes and other deductions.) The Federally-established debt-to-income target is a maximum of 43% for Qualified Mortgages. If your ratio is higher there may be other loans available - however, there may also be additional questions to establish your ability to repay, and the rates may be different than those available for Qualified Mortgages. Studies suggest that a high debt-to-income ratio puts a homeowner at greater risk of challenges making monthly payments. So consider your situation and risks carefully before exceeding that suggested ratio.
- Pre-Qualifying vs Pre-Approval
Watch this video and it will make sense. Pre-qualification is an informal way to see how much you maybe able to borrow. You can be pre-qualified over the phone with no paperwork by telling a lender your income, your long-term debts and how large a down payment you can afford. Without any obligation, this helps you arrive at a ballpark figure of the amount you may have available to spend on a house. Pre-approval is a lenders actual commitment to lend to you. It involves assembling financial records and going through a preliminary approval process. Pre-approval gives you a definite idea of what you can afford and shows sellers that you are serious about buying.
- Lending Process DOs and DON'Ts
To ensure you will not fall victim to loan fraud, as you will see in this video, be sure to follow all of these steps as you apply for a loan:
- Be sure to read and understand everything before you sign.
- Refuse to sign any blank documents.
- Do not buy property for someone else.
- Do not overstate your income.
- Do not overstate how long you have been employed.
- Do not overstate your assets.
- Accurately report your debts.
- Do not change your income tax returns for any reason.
- Tell the whole truth about gifts.
- Do not list fake co-borrowers on your loan application.
- Be truthful about your credit problems, past and present.
- Be honest about your intention to occupy the house
- After Your Loan Application…
Once you've supplied the 6 required piece of information and included any other information the lender deemed necessary you'll receive a Loan Estimate within 3 business days. Once all the information has been verified IF the loan is approved the lender will provide a Closing Disclosure to you three business days before loan consummation. They'll usually set a date for loan consummation“ which may also be at your closing meeting. Closing is basically transferring ownership of the property; consummation is committing to the loan itself. Once both are completed, you should be planning your move-in.
- Choosing Your Lender
There are some great tips in this video. Choose your lender carefully. Look for financial stability and a reputation for customer satisfaction. Be sure to choose a company that gives helpful advice and that makes you feel comfortable. A lender that has the authority to approve and process your loan locally is preferable since it will be easier for you to monitor the status of your application and ask questions. Plus, it is beneficial when the lender knows home values and conditions in the local area. Do your research, and ask family and friends.
- Choosing Your Home Loan
The video puts this in more visual terms, but your personal situation will determine the best kind of loan for you. By asking yourself a few questions, you can help narrow your search among the many options available and discover which loan suits you best.
- Do you expect your finances to change over the next few years?
- Are you planning to live in this home for a long period of time?
- Are you comfortable with the idea of a changing mortgage payment amount?
- Do you wish to be free of mortgage debt as your children approach college age or as you prepare for retirement?
- How To Compare Loans
Watch this video and take a few notes! First, devise a checklist for the information from each lending institution. You should include:
- the companys name and basic information
- the type of mortgage
- minimum down payment required
- interest rate and points
- closing costs
- loan processing time
- whether prepayment is allowed
- Understanding Loan Fees
Yes, loan origination involves costs and fees. As you will see in the video, when you turn in your application you will be required to pay a loan application fee to cover the costs of underwriting the loan. This fee pays for the home appraisal a copy of your credit report and any additional charges that may be necessary. The application fee is generally non-refundable.
- What is A Loan Estimate?
A loan estimate lists your loan terms projected payments, costs at closing measures for comparison, including Annual Percentage Rate and Total Interest Percentage and other considerations that lender may apply to this loan application. Each lender must supply a loan estimate within three business days of your application so that you can make accurate comparisons when shopping for a loan.
- What Is RESPA?
RESPA stands for the Federal Real Estate Settlement Procedures Act. This video tells you about it all. RESPA requires lenders to disclose information to potential customers throughout the mortgage process. By doing so, it protects borrowers from abuses by lending institutions. RESPA mandates that lenders fully inform borrowers about all closing costs, lender servicing and escrow account practices and business relationships between closing service providers and other parties to the transaction. For more information on RESPA, visit HUD.GOV or call 1-800-569-4287 for a local counseling referral.
- What's An Appraisal?
Every house is unique; appraisers are trained and licensed for expertise in putting a value on properties. Appraisers do not work for the buyer or the seller; their primary mission is actually to protect the lender whos risking money against the homes value. Appraisers have to weigh factors about the property and location - including size, condition and comparable properties - to appraise it is current value. They know how to focus on conditions that affect value;dishes in the sink do not;damage and neglect do. Appraisals lower than the proposed purchase price can affect transaction details.The seller might have to lower the price or the buyer might have to increase down payment or fund additional escrow. Appraisal seems a lot like inspection, but theyre not the same. You can think of it this way: Appraisers report on value to the lender Inspectors report on condition of the house and major components to the buyer. So - expect both appraisal & inspection in your transaction.
- What is A Credit Score?
As we show you in this video, a credit bureau score, or credit score is a number based upon your credit history that represents the possibility that you will be unable to repay a loan. Lenders use it to determine your ability to qualify for a mortgage loan. The better the score, the better your chances are of getting a favorable loan. Know your score and ensure that lenders have current information about it.
- Find Your Credit History
Watch this video and take a few notes! There are three major credit reporting companies:
- Equifax - www.equifax.com 1-800-685-1111
- Experian - www.experian.com 1-888-397-3742
- Trans Union - www.transunion.com 1-800-916-8800
- What Is Escrow?
Watch this video and take a few notes! There are three major credit reporting companies:
- Equifax - www.equifax.com 1-800-685-1111
- Experian - www.experian.com 1-888-397-3742
- Trans Union - www.transunion.com 1-800-916-8800
- Closing Costs Explained Visually
Purchasing a home is exciting. Once escrow begins, the excitement can change to frustration, particularly if you are not ready for theclosingcoststhat quickly accumulate. Closing costs simply refer to the fees associated with various things associated with the escrow process in a real estate transaction. In the excitement of having an offer accepted for your dream home, you can easily lose track of the fact you are going to need to have some serious cash on hand to pay them. Many people make the mistake of only assuming they need the down payment money, and have to rush around town trying to come up with money for theclosingfees. Do yourself a favor, and discuss closing costs in advance with your real estate or mortgage person. And watch this video to have a good mental picture of the costs that you are likely to incur.
- Title Insurance Explained Visually
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)? Doesnt 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 equities being your largest asset. Just how devastating would it be if you eventually discovered that someone else owned what youd 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.
- What Are Real Estate Commissions?
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.
- What Happens On Closing Day?
While this video simplifies things to help you remember: you will present your paid homeowners 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 are sure you understand all the documentation you will sign the mortgage, agreeing that if you do not 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 lenders 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.
- What Do I Get At Closing?
For most real estate loans, you will receive a Closing Disclosure 3 business days before loan consummation which frequently happens at the closing meeting. At the meeting itself you should receive a copy of your Mortgage Note your obligation to repay your Mortgage or Deed of Trust the binding Sales Contract and in some states you may get the keys to your new home.
- What Makes Up Closing Costs?
What you will 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:
- Attorneys or escrow fees (Yours and your lenders 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 lenders)
- Loan discount points
- First payment to escrow account for future real estate taxes and insurance
- Paid receipt for homeowners insurance policy (and fire and flood insurance if applicable)
- How Can The FHA Help?
Remember these points from the video:the FHA works to make home ownership a possibility for more Americans. With the FHA, you do not 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.
- What Are The Steps In FHA Loans?
The video puts this in more visual terms, but 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 do not prefer a face-to-face meeting, you can apply for an FHA loan via mail, telephone the Internet, or video conference.
- About FHA Closing Costs
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%.
- About 203(b) and 203(k) FHA Loans
The video puts this in more visual terms, but 203(b) is the most commonly used FHA program. It offers a low down payment, flexible qualifying guidelines limited lenders fees, and a maximum loan amount. 203(k) loans enable home buyers to finance both the purchase and rehabilitation of a home through a single mortgage. A portion of the loan is used to pay off the sellers existing mortgage and the remainder is placed in an escrow account and released as rehabilitation is completed. Basic guidelines for 203(k) loans are as follows:
- The home must be at least one year old.
- The cost of rehabilitation must be at least $5,000, but the total property value - including the cost of repairs must fall within the FHA maximum mortgage limit.
- What Are VA Loans?
As the video says, the name is misleading - they're not loans FROM the VA. The VA - short for US Department of Veterans Affairs - is the Federal military veteran benefit system. The VA administers benefits and services for service members, Veterans their dependents and survivors. Programs related to home loans are one of their key services. The VA is not a bank; they do not provide home loans themselves. But they do guarantee a portion of home loans provided to veterans and other eligible people by banks and mortgage companies. These guarantees enable lenders to provide more favorable terms. They are are commonly called VA Loans. They cover buying, building, repairing, retaining and adapting homes for personal occupancy by eligible Veterans and survivors.
- Major VA Loan Types
Major Veterans Affairs loan programs described in this video include: 1) Purchase Loans. These help eligible parties buy a home at competitive interest rates with little to no down payment and little or no private mortgage insurance. 2) Cash Out Refinance Loans which enable taking cash out of home equity to pay off debt, fund school or make home improvements. 3) Interest Rate Reduction Refinance Loans also called Streamline Refinance Loans can help veterans obtain lower interest by refinancing existing VA loans Other programs include: 4) Native American Direct Loans to help eligible Native American veterans finance homes on Federal Trust land. And 5) Adapted Housing Grants to help veterans with service-connected disabilities buy, build or modify a home suited to their disabilities. Many states offer additional resources to veterans, too. Talk to your home lender about your situation.
- What is The VA COE?
The COE is the key document that verifies to lenders that someone is eligible for a VA-backed loan. Service members, Veterans and National Guard and Reserve members may apply online or through their lender; most lenders have access to the system and can verify eligibility IF the VA has records on file. The VA also maintains a hot-line for assistance. Surviving Spouses can use VA Form 26-1817 to request determination of their eligibility for VA Loan Guarantees. Your lender may be able to assist with processing or contact the VA for information this video did not address.
- Making Your Home Ready To Sell
As we show you in this video, start several months before the property is made available. Look through the eyes of a buyer
- What needs to be cleaned?
- Repainted?
- Repaired?
- Or tossed?
- Preparing For Internet Showing
Today, your first showing will be on the Internet - you are watching this on the Internet, right? Your price, listing description and PHOTOS determine whether someone will visit in person. Consider professional staging advice or help. Prep for photo- and video-shoots just as carefully as real visits. Ask your realtor if they use a professional photographer If they do look at prior photos and pick someone who understands the job. Photos should make the most of your homes features and give prospective buyers an emotional connection that invites them to visit in person. Help them envision their lifestyle in the house not just the counters and walls. If your realtor recommends video,just as with photography stage it carefully and hire a professional it will pay off. And look over your listing when it goes live on a computer AND a mobile device to make sure it is accurate, pleasant and compels people to show up. Remember - your first showing these days will be on a screen.
- Home Sales Tips - Prepping The Inside
For many homes and markets, professional help from someone in staging makes good financial sense. Like this video say,check your staging options first. If you are doing it yourself,here are 5 key tips.One - Depersonalize. You want the buyer to envision this house being their home? Remove the things that make it YOUR home - photos, awards, collections, and STUFF.Two - MOVE the stuff. It is tempting to shove things in closets and attics but your prospective buyer will see a much smaller house if those spaces are full. Move it to a storage space or a friends garage.Three - Warm it up. Baking bread or cookies adding fresh flowers and colorful pillows and throws are touches used by professional stagers to make a place warm without your stuff.Four - Light it up!
- Light sells homes.
- Clean windows, inside and out.
- Light bulbs all working and curtains open or even gone.
- Home Sales Tips - Prepping The Outside
Professional staging may include the exterior, but if you are doing it all yourself,try the five things outlined in this video. 1 - Landscape & lawn. That's the first impression;make it a good one. Mow, prune, edge and get rid of junk! 2 - Paint And Clean! You do not have to do the whole house,but the front door and lintels should either be painted or cleaned.3 - Leaks & Repairs Small visible problems can become large mental objections and change how someone feels about your house. Fix em beforehand. 4 - Pets Some people have allergies and concerns. Time for Fido to visit a friend. You weren't including him with the house anyway.5 - Get Fresh Eyes Have your realtor or a friend who's willing to be candid tell you what you missed. Or pay a staging professional for a report. We do not really see familiar things well - so let them be your test buyer so you can present the best first impression to the real ones.
- How Do I Evaluate An Offer?
Well, as this story shows, there's more to an offer than the price tag. Factors you should consider:
- Is this offer at, near or above my asking price?
- Are there clauses and additions in their offer that change the terms and final price substantially?
- How long since I had another offer, or expect another offer? Can I wait?
- What Is A Counter-Offer?
The video puts this in more visual terms, but basically, a seller can respond to a buyers offer with changes - a counter - that improves the terms. You need to put yourself in their shoes and construct a modified offer that you think they might take that meets more of your needs. Then it is their turn - accept, reject, or construct yet another counter. It is an efficient market process, but beware: clauses and costs matter. Your broker should be closely involved in constructing a counter. Successful bargaining is best done with a win/win approach where each side is meeting their biggest needs and compromising others to reach an agreement. Remember that outside conditions like interest rates, and supply and demand, will keep evolving so you will need to be patient but decisive to craft an counter-offer that works for both sides.
- The Closing Process For Home Sellers
As this video explains, a signed sales contract doesnt mean your house is sold. There are still financial, contractual and legal steps for both sides. The buyer has to get financing to meet the contract terms - which includes credit checks. The property is inspected and appraised; title insurance and escrow accounts are set up while you locate new housing, pack and move. And take care of any obligations like painting or repairs. After the contract is signed, it can take a month or more of closing steps to reach the closing meeting. So plan on that when you plan to sell.
- 6 Home-Selling Mistakes
If you are selling, do not do these things - take some notes from the video!1. Dont Sell Before The House Is Ready. If it doesnt present well, it will not sell well.2. Dont Over-Improve People buy houses in neighborhoods. If yours is so improved that it sticks out you're hurting your chances at selling. 3. Hire Wrong Make your agent choice for business reasons. Personal relationships matter, but experience and expertise will determine financial success in your sale. 4. Dont Hide Anything Covering up or failing to mention real problems doesnt work. State disclosure laws are strict and you can be sued after the sale for anything that should have been made clear. 5. Dont Rush You should know about your mortgage, including pre-payment penalties your market conditions and trendsand your options for your next home before jumping on the market. 6. Dont Get Too Emotional Your attachment to your house and your own financial needs do not really matter in the transaction. If you cant set them aside the sale will not go as you'd like it to. Remember - it was your home but to the buyer it's as a house.
- What Can I Ask Brokers?
This video tells you what any real estate professional would tell you. Ask them:
- How long do homes in my neighborhood currently stay on the market?
- How would you price my home?
- What data did you use to arrive at that price?
- How would you market my home?
- What activities would you expect of me to market my home?
- How will you handle representation if one of your buyers is interested in my home?
- May I speak with sellers you've recently represented?
- How long a period would you want on a listing agreement for my house?
- Setting Your Price
While this video simplifies things to help you remember: your aim is to get the best price AND terms in your market during the period you are selling. Market conditions interest rates and competition all matter. The price you want, and the price a buyer will pay are framed by those complex conditions So pricing isn't completely predictable. Other factors include:
- How your home compares to other homes for the same buyers
- The inventory of homes and the level of buyer demand
- Which Square Footage Figure?
Home size is one of the key figures used in comparisons. But you may have different measurements to choose from, as you will learn in this video,including builder, appraiser, tax records and possibly owner records. Which one is right, and which one is best? The official figure is the one in tax records - typically, the county. Any other figure must be documented by a builders floor plan, an appraiser an official floor plan, prepared by a company for a fee. If your house has been remodeled and you are planning to sell you may want to confirm that the official record matches your actual house - and update if required. Most lenders will require an appraisal which will verify the figures you used.So be accurate and keep records to make the most of your sale.
- How Is A Home Marketed?
As you will see in the video, every home and market is a unique situation. Good marketing plans are specific to both. But every plan will include: Preparation Pricing and Marketing Activities. Preparation takes time - typically, months. Homes must be in show condition all repairs and upgrades complete and all photos and video completed before the home goes on the market. Pricing, likewise, should be planned in advance. Your broker will advise on both the best price and the best TERMS things like closing costs and seller credits to balance sales speed with sales price. Once the home is on the market it will quickly be entered in the MLS and will show up in Internet searches by agents and buyers. Your broker will advise other marketing activities including advertising, signage, showing and open house events so make the best of your situation. Their aim is to get negotiable offers, and then take the offer you accept through the closing process.
- Improving Your Home's Value
Buyers generally seek the least expensive home in the best neighborhood they can handle. Like the guy in the video says, you want to present a home that fits in the neighborhood but doesnt stand out too much. For example if neighbors are all 4 bedrooms, 3 baths and 3000 square feet additions that make your home 5, 4, and 4000 will make yours harder to sell. Improvements should make it show well and fit well in the neighborhood. Last-minute capital investments in large structural changes arent likely to pay off. But cosmetic upgrades like paint and landscaping help a home show better and often do pay off. Of course, all systems and appliances should work to get a top price. To make your home competitive and attract buyers and bids work with a professional real estate agent and start early.
- What Lenders Must Disclose
What Do Lenders Have To Tell You About Your Real Estate Loan? Federal disclosure forms define the information that creditor businesses MUST provide to consumers applying for real estate loans. As of August 1, 2015 lenders must provide TWO New TRID disclosure forms. for the most common kinds of real estate loans First, the Loan Estimate, which covers the key features, costs and risks of a mortgage loan. For an approved loan this must be returned to the consumer within 3 business days of loan application. If the loan goes forward, the Closing Disclosure form, covering key transaction costs, must be delivered at least 3 business days before loan consummation.
- Loans Covered By TRID Disclosures
What Kinds Of Loans Do TRID Disclosures Cover? TRID rules apply to MOST consumer credit transactions secured by real property. These include mortgages, refinancing, construction-only loans closed-end home-equity loans, and loans secured by vacant land or by 25 or more acres. The rule does NOT apply to Home Equity Line of Credit transactions reverse mortgages mortgages secured by a mobile home or other dwelling that is not attached to real property. Also, TRID rules do NOT apply to loans made by a person or business that makes 5 or fewer mortgages in a calendar year.
- Loans NOT Covered By TRID Disclosures
What Disclosures Are Used For Loans Not Covered By TRID? Creditors must continue to use the Good Faith Estimate, Truth-In-Lending Disclosure and the HUD-1 form for reverse mortgages, HELOCs, mobile home or other non-attached dwelling loans and others NOT covered by TRID. Housing assistance loans for low- and moderate-income consumers are partially exempt from TRID disclosures, and have specific rules. Creditors are not required to provide Loan Estimate and Closing Disclosure forms and related booklets and statements for these loans.
- 6 Required Pieces of Information
What 6 Pieces of Information Make A TRID Loan Application? Submitting these 6 pieces of information - Name Income Social Security Number Property Address Estimated Value of Property and Mortgage Loan Amount sought - constitutes a valid loan application under the TRID rule. You may apply and submit these in writing OR in oral form; a live conversation, or a phone call, backed by a written record of the conversation is a legitimate application. Once these 6 pieces of information are submitted a creditor MUST supply a Loan Estimate for approved loans within 3 business days.
- Can Lenders Request More Information?
Can Creditors Collect Information Beyond The 6 Required Pieces? In addition to the required pieces - N ame Income Social Security Number Property Address Estimated Property Value and Mortgage Amount sought - a creditor may collect whatever additional information they deem necessary. However, as soon as you have provided the 6 required pieces, the creditor has 3 business days to provide a Loan Estimate for approved loans.
- Do Lenders HAVE To Approve In 3 Days?
Do Creditors Have To Approve TRID Loans In 3 Days? If your loan is approved, on the terms you requested the creditor is required to provide a Loan Estimate within 3 business days. If they determine that your application will not or cannot be approved they do not have to provide a Loan Estimate. Likewise, if you withdraw your loan application within that period they do not have to provide the Loan Estimate. However, if the creditor does NOT supply the Loan Estimate in the required time approving and issuing the loan later under your original application terms will make them non-compliant with TRID Regulation Z.
- What Is A Business Day?
What Is A Business Day For Real Estate Loan Disclosures? Business day is defined slightly differently for Loan Estimates and Closing Disclosures. For Loan Estimates, each day on which a creditors offices are open to the public count as a business day. Loan estimates must be delivered or placed in the mail no later than the 3rd business day after receiving your loan application. For Closing Disclosures, a business day is defined as all calendar days except Sundays and the Federal public holidays The Closing Disclosure must be provided to you at least 3 business days PRIOR to loan consummation.
- How Long Will Lenders Keep My Records?
How Long Must Creditors Keep Real Estate Loan Records? Under the TRID rule, creditors must retain Escrow Cancellation and Partial Payment Policy disclosures for two years; Loan Estimate records for three years after loan consummation and Closing Disclosures for FIVE years. If a creditor sells or transfers their interest they must provide a copy of the Closing Disclosure to the new owner or servicer and both parties must retain it for the remainder of the 5-year period. Records CAN be stored digitally but it is NOT required. TRID does not define how long consumers should keep disclosure records.
- What Does The Loan Estimate Tell You?
What Will The TRID Loan Estimate Tell Me? The Loan Estimate documents the essential facts and terms of an approved real estate loan. It includes loan terms, projected payments and loan costs; cash and costs at closing time; the services for which you CAN and CANNOT shop in relation to the loan; summary information with which to compare this loan to others and other important details such as appraisal, insurance, late payment, refinancing, loan assumption policy and whether this lender intends to service this loan. The Loan Disclosure is a dynamic form; it will include information that IS related to YOUR loan and may leave out information that is NOT so forms from different lenders or for different loans may not look identical.
- Could My Loan Exceed The Estimate?
Could My Loan Costs Exceed The Loan Estimate? Yes, within defined limits. Service charges for which YOU shop and select a provider may change; the creditor is NOT responsible for providers who are NOT on their written list. In addition, prepaid interest, property insurance premiums and escrow or reserve deposits may change without legal tolerance limits. Charges for recording services, and 3rd-party services ON the creditor list, grouped together may not exceed the Loan Estimate total for the same charges by more than 10percent. While transfer taxes, fees paid to the creditor, mortgage broker or an affiliate of either and fees paid to a 3rd party for services the creditor does NOT permit you to shop. are ZERO tolerance and must match the Loan Estimate.
- Refunds - If Your Loan Exceeds Your Estimate
Whats Refunded If My Loan Is Higher Than My Estimate? If the amount you pay at closing exceeds the amounts disclosed on the Loan Estimate - beyond tolerance limits for each category - the creditor must REFUND the excess to you no later than 60 calendar days after loan consummation. For charges subject to a 10percent cumulative tolerance fees greater than 10percent of the Loan Estimate for the same charges must be refunded. For fees paid for 3rd party services which the creditor did NOT permit you to shop the FULL amount over the estimate must be refunded. For charges subject to ZERO tolerance including fees paid to the creditor mortgage broker or their affiliates any amount beyond the Loan Estimate must be refunded.
- Can Creditors Revise Loan Estimates?
Can Creditors Revise TRID Loan Estimates? Creditors are generally bound by the initial Loan Estimate. They are permitted to provide a revised Loan Estimate only under certain changed circumstances. These include circumstances that- a) increase settlement charges beyond the legal tolerance limits - b) affect YOUR eligibility or change the value of the loan security. Also, c) if the interest rate was NOT locked and the new rate changes points or lender credits d) for settlement delay on new construction loans within the stated revision window - typically 60 days, or e) if YOU indicate an intent to proceed more than 10 business days after the Estimate or request loan term revisions. Changed circumstances are extraordinary events beyond the control of you or the lending parties, OR changes or inaccuracies revealed in the information the lender used in preparing the Loan Estimate, OR NEW information on you or the transaction that the creditor did not use in the Loan Estimate.
- Can Creditors Revise Loan Estimates?
Can Creditors Revise TRID Loan Estimates? Creditors are generally bound by the initial Loan Estimate. They are permitted to provide a revised Loan Estimate only under certain changed circumstances. These include circumstances that- a) increase settlement charges beyond the legal tolerance limits - b) affect YOUR eligibility or change the value of the loan security. Also, c) if the interest rate was NOT locked and the new rate changes points or lender credits d) for settlement delay on new construction loans within the stated revision window - typically 60 days, or e) if YOU indicate an intent to proceed more than 10 business days after the Estimate or request loan term revisions. Changed circumstances are extraordinary events beyond the control of you or the lending parties, OR changes or inaccuracies revealed in the information the lender used in preparing the Loan Estimate, OR NEW information on you or the transaction that the creditor did not use in the Loan Estimate.
- Can My Settlement Charges Change?
Can My Settlement Charges Change? Yes, if circumstances change, such as- a natural disaster damages the property or affects closing costs; the title insurer providing the estimate goes out of business during underwriting; or new information on you or the transaction affecting settlement is discovered. If any of these events change 3rd-party charges beyond the 10percent tolerance limit creditors may issue a revised Loan Estimate. Note - If a creditor issues a Loan Estimate they are presumed to have collected all 6 pieces of required information. They may not claim a change in circumstances by receiving one of these pieces of information AFTER issuing a Loan Estimate.
- When Do I Get My Closing Disclosure?
When Do I Get My Loan Closing Disclosure? If an eligible loan proceeds from Estimate to closing, creditors must provide a Closing Disclosure form documenting the actual transaction terms and costs THREE business days before consummation. It must be in writing, whether paper or digital, and disclose ONLY the information specified by the CFPB. If terms or costs change prior to consummation the creditor must provide a corrected disclosure containing the updated terms. In some cases, this may require an additional 3-business-day waiting period to consummation. Consummation and Closing are legally distinct although they may occur at the same time depending on applicable State laws. Consummation occurs when you become contractually obligated to the CREDITOR on the loan not, for example, the real estate seller. The Disclosure must be delivered three business days prior to the legal Consummation date.
- Loan Estimates - Terms, Payments, Closing
Understanding Your Loan Estimate - Terms, Payments and Closing Costs The first page of your Loan Disclosure shows the Loan Terms Projected Payments and Costs at Closing. The Loan Amount, of course is the total you are borrowing. But the Interest Rate alone doesnt represent all of your borrowing costs. The APR figure on Page 3 shows that. Likewise, Monthly Principal & Interest aren't the complete amount you will actually PAY each month. The Projected Payments figures add other costs, such as Mortgage Insurance Estimated Escrow, Taxes, Insurances and Assessment to show the approximate amount you will pay each month, over time. The Estimated Closing Costs are directly loan-related. while the Estimated Cash to Close adds other known closing costs to tell you the estimated cash you will need to have to close this loan.
- Loan Estimates - Loan Costs
Understanding Your Loan Estimate - Page 2, Loan Costs Closing costs are fees paid when the title of the property is transferred to the buyer making them the legal owner. Origination Charges are fees collected by the lender for the loan process. They may including fees for handling the loan application and Origination Fees, which are compensation paid by the creditor to the entity that originated your loan. Points are fees paid to lower interest rates; points are considered prepaid interest for the buyer, and are usually tax deductible. Finally, Underwriting is a payment to the lender for their assessing the risk that the loan might not be repaid, based on the loan specifics and your financial characteristics.
- Loan Estimates - Services You Can't Shop
Understanding Your Loan Estimate - Services You Cannot Shop For These costs are paid to outside parties, not the lender, but you do not get to choose them. They may include- appraisal, which puts a value on your property on the lenders behalf; a credit report on you; fees to assess flood risk of your property, or for ongoing monitoring of flood zone changes related to your property; Tax monitoring to keep track of your property tax payments; and tax status research to assess the state of tax payments on the property. While you cant shop for these services, the price for these services in your final loan disclosure MUST match the price on the Loan Estimate; items in Cannot Shop have 0 tolerance for change.
- Loan Estimates - Services You CAN Shop
Understanding Your Loan Estimate - Services You CAN Shop For These costs are paid to outside parties and YOU are free to shop and compare providers - for pest inspection; for a survey to verify property lines and for a range of Title-related services. These might include- a Lenders title policy, which protects their legal interest in their loan collateral- usually the property itself; settlement agent fees, paid to the individual or company responsible for facilitating the final transaction; Title Search, which clarifies and documents legal ownership of the property; and a title insurance binder, which allows potential future use of the current title search results, conditions and exclusions for a short period to lower the cost of future title insurance. If you select service providers from the list provided by the lender, their fees cannot change by more than 10percent between the Loan Estimate and the final Loan Disclosure. If you select other providers the lender is not responsible for changes in those costs.
- Loan Estimates - Other Costs
Understanding Your Loan Estimate - Other Costs Real estate transactions require taxes, certain pre-payments, and escrow funding. Recording fees are charged by government agencies for keeping legal ownership records, while transfer taxes may be imposed by states, counties and municipalities on real estate ownership transfers. Prepayments may include homeowners insurance premiums on the property mortgage insurance, if required property taxes for a period of months in advance, and prepaid interest, typically for the period from closing to the first mortgage payment. Escrow funding may also be required against future annual charges for homeowners insurance, mortgage insurance and property taxes. Title insurance on YOUR legal ownership Owners Title Policy may be designated as optional, which only indicates that it is not required by this creditor. Some of these Other Costs may vary substantially between Loan Estimate and Closing Disclosure ask your lender about the tolerance rules or watch the video Could My Loan Cost Exceed The Loan Estimate?
- Calculating Your Cash To Close
Calculating Your Cash To Close Page 2 of the Loan Estimate provides the current ESTIMATED cash to close. Some costs will stay the same between estimate and closing. Some will change. A - Origination Charges - should match. B - Cant Shop - 10percent Tolerance C - Can Shop - no tolerance limit, BUT IF you select a provider from your lenders list their actual cost should be no more than 10percent greater than the estimate. E - Recording Fees are also subject to 10percent tolerance F - Prepaids, G - Initial Escrow and H - Other, such as Owners Title may vary from the Loan Estimate without tolerance limits. These estimates of closing costs plus loan details, Down Payment, Deposits Credits and Adjustments are used to calculate your estimated cash requirements when the loan finally closes. Consider the possible changes and tolerances when evaluating a loan decision.
- Understanding Loan Estimate Comparisons
Understanding Loan Estimate Comparisons Page 3 of your Loan Estimate includes measures to help you compare loans. In X Years shows the total amount you will have paid in that time, and the dollar amount applied to your loan principal. The ratio between total paid and principal reduced may change over time. The APR shows interest PLUS fees as an annual ratio - APR is the actual percentage this loan costs per year. The TIP figure relates the interest you will pay over the life of the loan to the loan amount. A TIP value of 25percent on a $100,000 loan means you will pay $125,000 - $100K principal plus $25K interest - over the life of the loan.
- Your Rights For Closing Disclosures
Your Rights And Rules For Closing Disclosures The Closing Disclosure documents the actual terms of your loan transaction. You should receive it no later than 3 business days before consummation. It must be in writing - paper or digital. If the loan terms or costs change prior to consummation, your lender must provide a corrected disclosure AND an additional 3-business-day waiting period until loan consummation. Waiving the 3-day waiting period is only permitted in certain circumstances, and only when the waiting period would cause a bona fide personal financial emergency.
- Closing Disclosures - Understanding Page 1
Understanding Your Loan - Closing Disclosure Page 1 The first page of your Closing Disclosure documents- The Loan Amount - the total you will actually borrow; The Interest Rate - which does NOT include the fees factored into the APR on Page 5; If this loan has a penalty for pre-payment or includes a balloon payment Page 1 will summarize the terms. Projected Payments will show the chief cost components - Principal & Interest Mortgage Insurance and estimates of your Escrow Payments over the life of the loan; you may see different columns for different periods if changes in terms such as mortgage insurance change payment totals. Closing Costs summarizes your loan closing expenses, and Cash To Close adds the additional amounts due to give you the cash balance you will need in 3 business days.
- Closing Disclosures - Closing Costs
Understanding Your Loan - Closing Cost Details Page 2 of your Closing Disclosure details specific closing costs. Section A includes- Origination charges collected by the lender Origination fees paid to brokers, loan officers or other parties and Discount Points - prepaid interest. These figures should match your original Loan Estimate. Section B covers services for which you could NOT shop. The total of these should be within 10percent of the total from your Loan Estimate. Section C covers services you could shop. If you chose providers from the lenders written list, costs should be within 10percent of Loan Estimate. The set of services you can shop may vary on different loans. The Recording Fees in Section E should be within 10percent; Other costs in E, plus F, G and H, may also vary from your Loan Estimate without tolerance limits. This page will also break out the costs YOU will pay, before or at closing; the costs the Seller will pay, any costs paid by others and any credits from your Lender.
- Closing Disclosures - Understanding Summaries
Understanding Your Loan - Cash And Transaction Summaries Page 3 of your Closing Disclosure will compare cash requirements from your Loan Estimate to your actual final charges. If Did this change? is YES notes for changed sections should be provided. The bottom line final Cash to Close is the money you will need in-hand in three business days. If your transaction has a Seller the summary table will show a line by line comparison of Borrower to Seller transaction details. If there is no Seller you may see a Payoffs and Payments table instead. Review the summary tables to understand the transaction and your financial commitments at loan consummation.
- Closing Disclosures - Important Additions
Understanding Your Loan - Additional Information Can Be Important Page 4 of your Closing Disclosure is important. It is NOT just standardized form information that is identical for every loan. Review these terms- Assumption - can this loan be transferred to another person if you sell or transfer the property? Demand - can the lender require early repayment of the loan? Late Payments - what penalty, after what period, applies? Negative Amortization - does this loan schedule or allow payments that do NOT fully cover the interest due, resulting in increased loan principal? Partial Payments - what is THIS lenders policy? You should also review Escrow Account details to understand whether you will pay additional property costs via regular Escrow Account payments or handle them yourself directly.
So you want to buy a house? Start with the basics.
How to Find the perfect home for you.
Understanding inspections and home warranties.
Everything you need to know about Mortgages.
Deciding on a Lender can be tough. Learn what to look for.
Your credit will help determine your interest rate.
Why is Title work so important? How do closings work?
What Federal Programs can help me buy a house?
What are VA loans?
Thinking of selling your home? Start with these videos.
Understand what happens when your house is up for sale.
What is TRID?
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