Home Buyers and Agents, If Financing A New Home, Be Prepared for New Closing Forms - The Loan Estimate and Closing Disclosure

Beginning October 3, 2015, the Good Faith Estimate (GFE), the HUD-1 and the Truth-in- Lending Act (TILA) disclosures will be replaced in most transactions by two new forms – the Loan Estimate and the Closing Disclosure. 
The Loan Estimate will be required for most transactions in which a loan application was received on or after the effective date. It replaces the GFE and the initial TILA disclosures. The Closing Disclosure will be required for any transaction in which a Loan Estimate was issued. It replaces the HUD-1 and final TILA disclosures.
These changes are the result of Dodd-Frank legislation, enacted in 2011, which directed the Consumer Financial Protection Bureau (CFPB) to create rules and regulations integrating the GFE and HUD-1 forms with the TILA disclosures. The regulation is sometimes referred to as the “TILA/RESPA Integrated Disclosure Rule” because it seeks to integrate disclosures required by the Truth-in-Lending Act and by the Real Estate Settlement Services Act (“RESPA”). 
The new forms are designed to aid the consumer in comparison shopping, improve consumer understanding and prevent surprises at the closing table.

In general, the new forms and rules will impose no new legal obligations on agents and brokers and will not impact the day-to-day handling of sales. However, it is widely expected that the new forms and rules may create delays in closing. 

The Loan Estimate integrates and replaces the existing GFE and the initial TILA forms. It combines an estimate of loan costs and terms, along with various disclosures relating to the loan terms. 
Generally, the creditor must deliver or place in the mail the Loan Estimate no later than the third business day after receiving the consumer’s application, and delivery of the Loan Estimate must occur no later than the seventh business day before consummation of the transaction. This second rule will typically only impact extremely short escrows.

The Closing Disclosure integrates and replaces the HUD-1 and final TIL disclosures. It enumerates all of the actual costs of the closing and loan terms, along with various disclosures relating to the terms of the loan. The borrower must receive the Closing Disclosure no later than three business days before consummation.

For More Information on New Closing Procedures, please call me at 858-603-7879. 

Should We Get A Mortgage Now Or Wait for Interest Rates to Fall?

Interest rates on the 30-year fixed-rate mortgage change all the time, so today's rate probably isn't the same as last month's or next month's - in fact, it isn't.

If you've found the home you want, you might as well take the plunge. On January 3, 2014, the average interest rate for a 30-year fixed-rate mortgage was 4.63 percent nationwide. By October 17, the rate fell to 4.03 percent and remained there for a week or more. It was the lowest level since June 2013 according to the mortgage-information website HSH.com.  Demand for home loans surged, but the increase was driven by homeowners seeking to refinance existing mortgages.  Today’s purchase rates are even lower.
Here's what's behind the lower home loan rates:
Weak economic news normally causes money to flow out of Stocks and into Bonds, helping Bonds and home loan rates improve, while strong economic news normally has the opposite result. The chart below shows Mortgage Backed Securities (MBS), which are the type of Bond on which home loan rates are based.

When you see these Bond prices moving higher, it means home loan rates are improving—and when they are moving lower, home loan rates are getting worse.

To go one step further—a red "candle" means that MBS worsened during the day, while a green "candle" means MBS improved during the day. Depending on how dramatic the changes were on any given day, this can cause rate changes throughout the day, as well as on the rate sheets we start with each morning.

As you can see in the chart below, Mortgage Bonds have been trending higher. Home loan rates remain near record lows

Chart: Fannie Mae 3.5% Mortgage Bond (Friday January 9, 2015)



When interest rates drop, here's how to take advantage of them: First, figure out what the best rates are in your area. The gap between the lowest and the highest rate a mortgage applicant is offered averages about 0.30 percentage points, according to mortgage lenders. On a $400,000, 30-year fixed-interest rate loan at 4.03 percent, borrowers will pay $145,000 in interest over the first 10 years of the loan and $289,969 in interest over the life of the loan. Calculating: With a 3.73 percent interest rate, borrowers will pay $11,464 less in the first 10 years and $24,717 less over 30 years. Following the $400,000 example, a person with a FICO score higher than 740 on a scale that ranges from 300 to 850, who is paying 20 percent down, could get a mortgage at 3.75 percent interest from an online lender or 4.07 percent from local lenders. Some banks charge less if you have a savings account or brokerage account with them. Once you find a rate that appeals to you, figure out how much you'll pay per month and whether that amount is manageable.

For more mortgage info, please contact me. I work with different in-house lenders who can help you become (pre) approved and ready to move.  858-603-7879 OR  robert@sandiego-ca-homes.com
 
www.rmsandiegohomes.listingbook.com / www.sandiego-ca-homes.com


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Robert Moore
 

 

 

San Diego Sees Conforming Loan Limit Increase to $562,350 in 2015

Fannie Mae and Freddie Mac were created by Congress. They perform an important role in the nation’s housing finance system – to provide liquidity, stability and affordability to the mortgage market. They provide liquidity (ready access to funds on reasonable terms) to the thousands of banks, savings and loans, and mortgage companies that make loans to finance housing.

Fannie Mae and Freddie Mac buy mortgages from lenders and either hold these mortgages in their portfolios or package the loans into mortgage-backed securities (MBS) that may be sold. Lenders use the cash raised by selling mortgages to the Enterprises to engage in further lending. The Enterprises’ purchases help ensure that individuals and families that buy homes and investors that purchase apartment buildings and other multifamily dwellings have a continuous, stable supply of mortgage money.

Fannie Mae and Freddie Mac are restricted by law to purchasing single-family mortgages with origination balances below a specific amount, known as the “conforming loan limit.” Loans above this limit are known as jumbo loans. The national conforming loan limit for mortgages that finance single-family one-unit properties increased from $33,000 in the early 1970s to $417,000 for 2006-2008, with limits 50 percent higher for four statutorily-designated high cost areas: Alaska,  Hawaii, Guam, and the U.S. Virgin Islands.

Since 2008, various legislative acts increased the loan limits in certain high-cost areas in the United States.  While some of the legislative initiatives established temporary limits for loans originated in select time periods, a permanent formula was established under the Housing and Economic Recovery Act of 2008 (HERA).  The 2015 loan limits have been set under the HERA formula.

In line with Federal Housing Finance Agency (FHFA)  November 24, 2014 announcement on the 2015 loan limits, the base conforming loan limits at the existing 2014 levels through December 31, 2015 are being maintained, and increasing the high-cost areas loan limits in certain counties.

Loan Limit Increase for 46 High-cost Areas And What This Means for San Diego

FHFA has identified 46 counties in designated high-cost areas where the high-cost area loan limits will increase. All other high-cost area loan limits will remain unchanged from the 2014 levels. San Diego is one of four California counties identified as high-cost areas.

This is fantastic news for borrowers of conforming loans. The current threshold is $546,250 in San Diego County, which is set to increase to $562,350 in 2015, that's an increase of $16,100. Qualifying buyers will have an additional $16,100 at their disposal for a home purchase in 2015. With interest rates still at historical lows, this will serve buyers well, especially those first-time home buyers looking to enter the home equity market.

For more information on becoming pre-approved for a mortgage loan that matches your requirements, feel free to give me a call at 858-603-7879 or email me at robert@sandiego-ca-homes.com www.sandiego-ca-homes.com


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RM