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The New Good Faith Estimate:  “GFE 2010”

US Department of Housing and Urban Development (HUD) has made some major changes to the Federal lending laws which include a new “Industry Standardized” Good Faith Estimate.  All loan originators including banks, mortgage lenders and mortgage brokers were required on January 1, 2010 to utilize the new GFE 2010.

One of the main reasons HUD initiated this GFE 2010 was to make it easier for consumers to shop for a home loan. One change made was consolidating closing cost into fewer categories to prevent junk fees from being hidden.

Consumers have up to 10 days to shop for a loan and compare “apples to apples”. Most foods have an expiration date, now so does the new GFE 2010.  

Another advantage is the consumer’s ability to obtain a credit. Don’t confuse this credit to a “Seller’s credit” sometimes seen in a purchase contract.  This is a “Lender’s Credit”.

As simple as HUD tried to make this new GFE 2010, many are still confused. That’s where we come in.  We are here to educate our clients and help analyze your personal GFE 2010.

Click Here: Http://hud.gov/content/releases/goodfaithestimate.pdf        

Some believe the 10 year T-bill is what moves mortgages, but in reality the Mortgage Backed Securities (MBS) are what influence the direction of interest rates.

Mortgage rates have been artificially low for quite some time now. In Nov 2008, the FEDs committed to purchasing MBS and this has kept our interest rates at bay. This March is the last month the FEDs are committed to purchasing MBS and many expect rates to increase soon after.

To learn more about interest rates, please click or copy the link below and view the video on "How Rates Move".

http://www.youtube.com/watch?v=vj8bZGkMST0&feature=player_embedded

If you have any questions or want to see if you qualify for a mortgage today, please feel free to contact us.

The appraisal process is pivotal to closing your loan.  As of Feb. 15 , 2010, FHA loans are required to use an Appraisal Management Company (AMC) when ordering  appraisals. Conventional loans adopted this practice in the latter part of 2009.

The process is taking longer which can cost the consumer more to complete a loan.  We have seen appraisals come in under and over the current market values. In most cases out of area appraisers are being assigned by the AMC; hence, not entirely familiar with certain areas.

With every appraisal, the underwriter will review the appraisal report and establish a recommendation of value. It is not unusual for them to request a second appraisal. This long process is prohibiting some transactions from closing.

One client had three comparable properties close escrow the week their appraisal was being done. Each comparable property had lower values which effectively reduced their value and they were unable to refinance.

Timing is essential. So if you're considering refinancing your home, it maybe best to not postpone your decision and move forward. If you're purchasing, make sure to contact a reputable real estate professional that can properly negotiate your purchase price and that they are capable to renegotiate the purchase price in case the appraised value is lowered.

Let us know if we can help with your loan and/or if you need a real estate professional recommendation.

Zenet and Carri have been busy.  Check out these two links:

    Stay tuned to learn more about the new 2010 Good Faith Estimate.