As the 2012 spring real estate market heats up, many buyers and investors are researching home values, taxes, schools, neighborhoods and crime rates. Unfortunately, many times they miss one of the most important items in a real estate transaction…The Mortgage.
Even though mortgage rates are still at historically low levels (the average 30 year fixed at 3.85%) there may be hidden fees that could end up costing you a bundle. Sometimes even the most prudent buyers, who shop for their mortgage long before they start looking at homes, find at the close of escrow, that they have paid way more than they were quoted, by their lender.
These extremely low interest rates coupled with the rising costs of government insured programs and lender guarantee fees have lead lenders to start passing many more fees on to the consumer. After all they are running a business and they need to make a profit. Mortgage Insurance Premiums have also started rising and are expected to continue that trend.
So how do I protect myself? How do I know I am getting the loan and the rate I was promised? Where do I find hidden mortgage fees?
The answer is quite simple…The fees are not hidden, nor can they ever be. It is required by the Real Estate Settlement Procedures Act (RESPA) that lenders disclose ALL fees associated with your loan, to you. This must be done up front…on a Good Faith Estimate (GFE). Here is an example of what one should look like; GFE example Of course if this is a private (hard money) loan or it is not a government guaranteed loan, these RESPA protections may not apply.
Now don’t get me wrong “Seller Financing” and other hard money lenders are a great option for some people. If you are having difficulty getting a traditional loan, because of credit, foreclosure, job seasoning or other issues, yet you want to get into a home before prices start skyrocketing again, these types of loans are a great option. However, just like everyone else, you must get all terms in writing before you agree to anything. And NEVER let your emotions lead you down a path that your gut tells you isn’t right.
Please have a look at www.OrangeCountyRealEstates.com for more information.