Chris Whitehead

Don’t spend money on any “Big Purchases,” (over a couple of hundred dollars), while you are trying to buy a home!!

This is a big no-no!

The reason for this is that if you are getting a loan, at the last minute before the lender funds your loan they may pull your credit again and if your credit score has changed because you have more debt or the ratios that you originally qualified under are different, you could lose the house!

So don’t buy furniture, appliances, cars, Harley’s, clothes or anything of the sort! Even if you are paying cash because your approval may be based on "reserve" money that you have in the bank.

Wait until your loan has funded, the property is closed and you have the keys and then go shopping!

Also, don’t change jobs while going from approval to closing. This will cause the approval process to be redone and will cost time and, perhaps, money.

If you are buying a home in the next 6 months and want to learn more about the process from an Exclusive Buyer Agent. Call HomeBuyer Experts at 330-328-3170 or you can email us.

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When the Real Estate Settlement and Procedures Act went into effect in 1974 cosumers got a simplified process as well as a protection from abusive lending practices. The purpose that RESPA has according to HUD's web site is

1. to help consumers become better shoppers for settlement services by requiring that borrowers receive disclosures at various times. Some disclosures spell out the costs associated with the settlement, outline lender servicing and escrow account practices and describe business relationships between settlement service providers.

2. to eliminate kickbacks and referral fees that unnecessarily increase the costs of certain settlement services by prohibiting certain practices. Section 8 of RESPA prohibits a person from giving or accepting any thing of value for referrals of settlement service business related to a federally related mortgage loan. It also prohibits a person from giving or accepting any part of a charge for services that are not performed. Section 9 of RESPA prohibits home sellers from requiring home buyers to purchase title insurance from a particular company.

When a buyer applys for a loan the LO (Loan Officer) must give the potential client 3 things.

• a Special Information Booklet, which contains consumer information regarding various real estate settlement services. (Required for purchase transactions only
• a Good Faith Estimate (GFE) of settlement costs, which lists the charges the buyer is likely to pay at settlement. This is only an estimate and the actual charges may differ. If a lender requires the borrower to use a particular settlement provider, then the lender must disclose this requirement on the GFE.

• a Mortgage Servicing Disclosure Statement, which discloses to the borrower whether the lender intends to service the loan or transfer it to another lender. It also provides information about complaint resolution.

It is the requirements for disclosing settlement costs that HUD proposed changes to in March of 2008. The proposed rule change came because some in the industry as well as many consumers felt that RESPA as a whole needed updated. HUD received over 12,000 public comments regarding the proposed rule. Part of the original rule called for a closing script that was estimated to take 45 minutes to read. two thirds of the members of Congress requested that HUD withdraw the rule. Instead of withdrawing the rule HUD simply revised it.

On November 12th, 2008 filed its final rule. Below is a fact sheet from HUD's web site that outlines the final rule.

• For the first time ever, HUD will require mortgage lenders and brokers to provide borrowers with an easy-to-read standard Good Faith Estimate (GFE) that will clearly answer the key questions they have when applying for a mortgage including:
  
  
  • What's the term of the loan?
  • Is the interest rate fixed or can it change?
  • Is there a pre-payment penalty should the borrower choose to refinance at a later date?
  • Is there a balloon payment?
  • What are total closing costs?


• HUD estimates that by improving upfront disclosures on the GFE, and limiting the amount estimated charges can change, consumers will save nearly $700 in total closing costs.



• Based on substantial public comment, HUD withdrew a proposed requirement that closing agents read and provide a 'closing script' to borrowers in favor of a new page on the HUD-1 Settlement Statement that allows consumers to easily compare their final closing costs and loan terms with those listed on the GFE.



• HUD's new Good Faith Estimate has been reduced from four to three pages, including an instructional page to help borrowers better understand their loan offer. In addition, the GFE will consolidate closing costs into major categories to prevent junk fees and display total estimated settlement charges prominently on the first page so the consumer can easily compare loan offers. HUD will specify the closing costs that can and cannot change at settlement. If a fee changes, HUD will limit the amount it can change.



• To help borrowers compare their Good Faith Estimate with their HUD-1 Settlement Statement, each designated line on the final HUD-1 will now include a reference to the relevant line from the GFE. Borrowers will now be able to easily compare their estimated and actual costs in the same manner many commenters suggested.



• HUD will require lender payments to mortgage brokers (often called Yield Spread Premiums) to be disclosed in a more meaningful way. These payments are directly dependent on the interest rates that consumers agree to. To ensure that HUD's new requirement will not create a consumer bias against brokers, the Department did rigorous consumer testing and found the new Good Faith Estimate helped consumers to select the lowest cost loan nine-out-of-10 times, regardless of whether the loan was originated by a lender or a broker.



• Loan originators will be required to provide borrowers their Good Faith Estimate three days after the loan originator's receipt of all necessary information. To facilitate shopping, loan originators could not require verification of GFE information (tax returns etc.) until after the applicant makes the decision to proceed.



• HUD will allow lenders and settlement service providers to correct potential violations of RESPA's new disclosure and tolerance requirements. Lenders and settlement service providers will now have 30 days from the date of closing to correct errors or violations and repay consumers any overcharges.



• The new, standardized GFE and revised HUD-1 will not be required until January 1, 2010.

If you are buying a home in the next 6 months and want to learn more about the process from an Exclusive Buyer Agent. Call HomeBuyer Experts at 330-328-3170 or you can email us.

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As the economy struggles to come back into balance, potential first time homeowners sometimes need a little boost to their cash flow. The OHFA down payment assistance grant may be the answer. The grant will raise the interest rate by 1/2 of 1% so homebuyers should consider the length of time they plan on owning this home to determine if this is a good fit or not.

The following is taken directly from OHFA's web site.

In some cases, buyers need additional financial assistance to purchase a home. That is why OHFA is
offering the new Down Payment Assistance Grant that is up to 2.5 percent of the home’s purchase price.
This grant can be used for the down payment, closing costs or a number of prepaid expenses incurred
by the borrower prior to closing. However, homebuyers who use the grant pay a slightly higher rate of .5
percent on their mortgage for this added benefit. Many mortgage programs will require the borrower to
contribute some of their own funds, in addition to the OHFA grant.

To qualify for the Down Payment Assistance Grant through OHFA, the homebuyer must complete required
homebuyer education to prepare for sustainable homeownership.
Homebuyers may complete a course offered by any HUD-approved housing counseling agency, or use the
streamlined OHFA education program by following these simple steps:

1. Go to www.ohiohome.org and review the homebuyer guide found in the Homebuyer Education section.
Lenders may be able to provide you with printed information if the internet is unavailable to you.
2. Complete the 25-question homebuyer education test and the monthly budget form.
3. Fax the test and budget form by following the instructions on the website (or those provided by the
lender) to OHFA. The Agency will forward your information to a housing counseling agency serving your
county.
4. A housing counselor will contact you to arrange a one-hour telephone consultation to review the test,
budget, and to answer any questions you may have about the process.
5. Once the education requirement is met, a certificate of completion will be issued to the lender and
OHFA. When all other documentation is completed and approved, the loan can close.

If you are a first time homebuyer and are buying a home in the next 6 months and want to learn more about the process from an Exclusive Buyer Agent. Call HomeBuyer Experts at 330-328-3170 or you can email us.

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There is a rule of thumb that says you should not buy a home that costs you more per month that 20 to 25% of your take home pay. We rarely see anyone following that rule of thumb today.
Too many consumers are buying homes that take a large part of their monthly income. This leaves little room in their finances for emergencies, furniture, vacations, investing, etc. With the past relaxed lending requirements, people were buying way more home than what they could realistically afford. If you go down this road, chances are that you’ll grow to hate this home. You should own a home, the home should not own you.

If you are buying a home in the next 6 months and want to learn more about the process from an Exclusive Buyer Agent. Call HomeBuyer Experts at 330-328-3170 or you can email us.

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Emotions can cost a Buyer tons of money! Here in the Northeast Ohio real estate market we sometimes see buyers and sellers getting together either on-purpose or by accident before there is a ratified sales contract. This is VERY dangerous. It can affect the whole negotiation process. If you are the buyer and you get all excited about the property in front of the seller, it is equivalent to playing poker with your cards on the table. “You’re never going to win!”. So keep your emotions and your tongue in check. If you know you are the kind of person that just can’t do it, then talk to your Realtor and ask them to make sure they only show you homes when the seller is not there. Trust us on this one, the Realtor will be happy do so because it will make the negotiation process go MUCH smoother. Home purchases are a tricky thing. On one hand they are a HUGE emotional experience filled with all kinds of highs and lows. On the other hand, it can be one of the biggest business decisions of your life. Business filled with emotional exuberance can be costly by showing your hand and causing you to be on the weaker side of the negotiation table. Bottom line…”Don’t open your mouth and insert your foot!”

If you are buying a home in the next 6 months and want to learn more about the process from an Exclusive Buyer Agent. Call HomeBuyer Experts at 330-328-3170 or you can email us.

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