Buying a home? Accurate numbers are vital!!

The days of changing the sales price, loan terms, certain borrower fees, or even your mortgage company shortly before or at the closing of a home purchase are history after July 30th!

The Federal Reserve is implementing major rule changes to the Truth-in-Lending disclosure. These new rules add time restrictions that will hold up a closing if there are any financial changes (amount of the loan, closing costs, rates) that cause the Annual Percentage Rate (APR) or the finance charge to change! In addition, if a borrower is having difficulties closing with a particular lender and wants to switch to another mortgage company, the ability to transfer a loan from a lender one day and close with another lender the next day is gone. Contracts for homes closing in a week's time cannot be written. These new rules apply to any financed home purchase (including refinancing and home equity loans.) They do not apply to non-occupied properties.

What does this mean to YOU? Be sure your lock is adequately long, and (most important!) that you choose a lender who is very experienced and detail-oriented. Need help finding such a lender? Your Realtors, Mike and Jean, are here to help you!! (Above information provided by Allan Atkinson, Vice President, Cornerstone Mortgage Company)

My home sold -- but it didn't APPRAISE!

There are some big changes in the Appraisal World.

If you are selling your home or refinancing,

these changes will affect YOU!

In the past, there have been occasions in which a lender or loan officer has "encouraged" the appraiser to make sure a home "hit" a certain value. If the appraiser didn't do this, the mortgage company hinted that it might stop doing business with that appraiser.

By the same token, there have been occasions when a Relocation Company has requested that the appraisal be as low as possible, and again, the appraiser often did so in order to maintain his profitable business with that company.

NEW: Appraisers for conventional (conforming and non-conforming) loans are no longer allowed to communicate directly with anyone involved with the loan. (This does not apply to FHA or VA loans). That should be the good news. However, in order to comply with this:

• Lenders are now ordering their appraisals through appraisal management companies, which charge a fee to the lender and then pay an outside appraiser a portion of that fee.
• The appraisers are appraising homes in an areas with which they are totally unfamiliar.
• Often, they can only use sales no older that 90 days.

(With all of the above in mind, it seems strange that the new code does allow the fully executed purchase agreement to be provided to the appraiser as part of the appraisal assignment!)

What does this mean to you? No longer can a seller "test the market" to get a better price than a neighbor got 6 months ago. Even if you were to have multiple offers at that price, your buyer might not be able to get a loan, because the appraisal would be strictly based on very recent past sales.

The appraiser CAN still confer with your Realtor, however, so if you are planning to sell your home, be certain that you use a Realtor who has an excellent understanding of the local market, particularly in complex areas like The Woodlands, and who is able to provide the appraiser with the information to confirm your home's value.

Hiring a knowledgable Realtor has always been important. Now it is vital!!

It's time to talk "Money"

Can you get a loan for buying a home these days? Absolutely!

Is it more difficult? You bet.

It's getting a little rough out there!! Lenders are reviewing credit scores more closely, asking for more and more information (sometimes right up to the closing!), and appraisers are following much tighter guidelines. Forewarned is forearmed, as you know, so our blog will give you information as it happens, or tips about stuff that's already changed!

Brand new! If you are getting a "conventional" loan (less than $417,000, and not VA or FHA), and you are putting less than 20% down, you will be required to have Private Mortgage Insurance (PMI). That is not new. What IS new is that one PMI company (and others will follow soon) is requiring a minimum credit score of 680 on all applications received after July 6th. In addition, most PMI companies are limiting the debt-to-income ratio to 41% to 45% (i.e., all of your debts, including your mortgage payment, cannot exceed more than 41-45% of your gross income.) (Information provided by Sue Izard, Woodforest Mortgage Company)

It's important that you know what your credit score is! You can do this for FREE once a year by clicking onto the link provided to the right. Happy House Hunting!!