Tag Archives: financing

New Changes Coming to Buying and Selling Process – What You Need to Know

The Consumer Financial Protection Bureau (CFPB) is a Congress-established agency with regulatory control over federal consumer protection laws. Their goal is to make rules in our various financial markets more effective and consistent to protect consumers. Recently the CFPB created some new rules aimed at helping buyers and sellers have a better understanding of the borrowing process. Below are some of the changes you can expect to see beginning August 1, 2015.

Buyers buying their home with a mortgage will receive a standardized Loan Estimate document from the lender which outlines variables such as the type of loan, payment schedule, interest rate for the mortgage, information about prepayment penalties and other terms of the transaction (such as balloon payments or mortgage insurance), costs to close the loan, and State Law provisions. This document is provided to the loan applicant no more than three days after the buyer submits a loan application.

In addition, Buyers will receive a Closing Disclosure no less than three days before the loan is scheduled to close which reiterates the above variables.

The mandatory three day review period for both of these documents was put in place to allow borrowers the time they need to read through them and have a thorough understanding of exactly what they are committing to. Furthermore, these documents include instructions to the borrower to compare the Loan Estimate to the Closing Disclosure verifying the two documents have the consistent information.

The biggest impact of these changes is that the lender will need more time to process your loan and turn documents over to escrow. At a minimum, it is likely buyers will need 3 more days, but more likely it will be 5-10 days.

The forms themselves have been streamlined and are easier to understand. The interest rate, monthly payments, and the total closing costs are clearly indicated on the first page of the documents for easy reference and to make it easier to compare loan products with different lenders.

Both the Loan Estimate and Closing Disclosure are used for closed-end mortgages, meaning they are not used for home equity lines of credit, reverse mortgages, or for any loan not attached to land. Furthermore, these rules do not apply to creditors who produce fewer than five loans per year.

These new policies will make the process easier and more transparent to borrowers. If you are buying or selling a home this summer and expect the contract for purchase and sale to come in around the end of July, remember that these policies may impact your transaction as lenders and closers navigate through the new documents and timelines. I have attended several workshops on the changes and would be happy to answer any questions you may have. Please give me a call: (206) 790-0081 or send an email to :jamie@jamieflaxman.com.

Sources:

http://www.consumerfinance.gov/

http://files.consumerfinance.gov/f/201503_cfpb_tila-respa-integrated-disclosure-guide-to-the-loan-estimate-and-closing.pdf

http://files.consumerfinance.gov/f/201506_cfpb_factsheet_will-the-new-mortgage-disclosures-delay-my-closing.pdf

 

Does it Matter Which Lender I Use?

Yes, and it matters more than you think. Buying a home will likely be the largest financial transaction of your life. Do you want to trust a random person on a website or at an 800 number, or someone you can call anytime (including evenings/weekends on their cell phone) or even meet with in person?

I am representing 2 buyers on transactions that close in the next few weeks. One is using a local mortgage broker and the other a large national lender. I also just had a transaction close with one of the big banks.

Here’s the main difference I have experienced with these different lenders – how well they communicate what’s going on with the loan. The local lender sends a weekly update on the loan; she also calls or emails relevant information as they come up. I was notified immediately when the appraisal came in (whereas the national lender never told us it was in or approved, we had to call repeatedly to learn that). With the national lender and the big bank, I had to reach out to both of them if I wanted any information. And it was hit and miss if a phone call or email was returned.

The most important question, of course, has to do with whether the lender can close the loan on time. While the big bank did close on time, it wasn’t because of their efforts. The bank wanted to extend closing; however, the buyer was adamant about the loan closing on time and between her and the escrow officer, they made it happen.

While I’m fairly confident the national lender will close on time, they are saying they wish they had more time (they already have 35 days). Local lenders are closing loans in as short a period as 10 days; 35 days should not be necessary.

You know the phrase “buy local,” let’s expand that to “mortgage local.” With the connection you make with the local mortgage officer (and with national lenders, there may be many different people you work with), you are more likely to have a smooth transaction. Plus, our local economy benefits when you mortgage local.

For a list of recommended lenders, contact me at jamie@jamieflaxman.com or 206-790-0081.

Market Update

I have been so busy over the past week that I barely have time to write this post. Any question about how hot the market is? Here’s a story for you. Yesterday I submitted an offer on behalf of a client for a wonderful Phinney/Greenwood home. There were 9 offers including ours, and I believe all but one conducted pre-inspections. As one of the other brokers submitting an offer said, it was going to be a “blood bath.” Many of the offers had escalation clauses – and boy did it escalate. I can’t disclose how high it went until after the transaction closes, but my buyer did not have the highest – we came in 3rd. The offer that had the highest dollar amount had weak financing and wasn’t willing to do anything to change the financing situation; the next offer was only a few thousand more than ours but also had weak financing. MY CLIENT GOT THE HOUSE because she had strong financing (30% down and the lender talked with the listing agent) and my buyer was willing to come up a few thousand dollars more.

The bottom line. Financing is as important as price. And who the lender is may make a difference. My client’s lender was willing to go above and beyond to advocate for the client. On-line lenders and big banks often won’t do this. With them, you’re just one of hundreds of mortgages – personal relationships make a difference.

The bottom line. The market is still hot. A colleague had 11 offers on another listing. Inventory is low demand is still high.

Contact me at jamie@jamieflaxman.com or 206-790-0081 to discuss putting your home on the market or buying a home.