The new Good Faith Estimate 2010 Form is now officially in affect.  This new form became affective on January 1, 2010, and will in many ways change the way Lenders have been doing things.  The new Good Faith Estimate 2010 Form will have both a positive and negative impact on both the Borrower and the Lender.

The positive is that the new Good Faith Estimate 2010 Form will now require ALL Lenders to use the same format.  In the past it was some times difficult for a Borrower to compare loan costs between Lenders, because the costs were disclosed and broken down differently from one Lender to another.  Now everyone will have to do it the same way and use the same form.  The new Good Faith Estimate 2010 Form also will prevent Lenders from changing certain costs that are originally listed on the new Good Faith Estimate 2010 Form, I will list these later.  The new Good Faith Estimate 2010 Form will also have an impact on the HUD-1, because now what was listed on the new Good Faith Estimate 2010 Form will have to be compared to that actual cost on the last page of the HUD-1.  These are all positive changes that the new Good Faith Estimate 2010 Form will have in my opinion.

What isn't positive about the new Good Faith Estimate 2010 Form in my opinion is that it does not break costs down like the Good Faith Estimate Form that I have right now, instead groups costs together in several places.  The new Good Faith Estimate 2010 Form will also cause Lenders to possibly not give Borrowers a Good Faith Estimate at the time that they are Pre-Approving a Borrower, because it locks them into certain things that they can't change later.  It is good that Lenders can't  just change their things, but there are situations that it might be out of their control why a cost changed and now the Lender is locked into what was originally disclosed under a different set of circumstances.  For this reason Lenders may now choose to not issue a Good Faith Estimate until they are actually putting a loan into process.  This in my opinion will make it more difficult for Borrowers to compare costs between Lenders prior to submitting a loan.

I am going to stop this post at this point, and continue it in one or two more posts this week.  What I have found over a period of time here on ActiveRain, is that if you make a blog to long, fewer people read it.  This information is too important, and will have such a big impact on Borrowers as well as everyone else in this industry, that I feel I need to present it in such a way that others will take the time to read, and not be turned off by its lenght.

So I hope that those that are reading this blog now will take the time to return and read the continuing blogs on the new Good FFaith Estimate 2010 Form.  I promise that it will not be a waste of your time to do so.

 

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Info about the author:

George Souto is a Loan Officer who can assist you with all your FHA, CHFA, and Conventional mortgage needs in Connecticut. George resides in Middlesex County which includes Middletown, Middlefield, Durham, Cromwell, Portland, Higganum, Haddam, East Haddam, Chester, Deep River, and Essex. George can be contacted at (860) 573-1308 or gsouto@mccuemortgage.com

Whether you are buying a home or refinancing the one you already own, there are steps you can take to avoid unnecessary problems as the transaction gets to closing.  While it is important your chosen loan officer (read->Me;) helps to educate you on these, doing your due diligence before hand is rarely a bad idea.  Here's some food for thought:

• If you are required to bring money to the table, make sure you have enough money in your account to do so.  Also, lenders & banks often require that funds to close a loan are seasoned and sourced.  This simply means that they want to know where it is coming from and how long it has been available.  Generally speaking, they want to make sure that it has been available at least 60 days.  As far as the source of the money, your bank account is acceptable.  Your mattress is not. 

 

• Don't be moving large amounts of money around.  Any irregular deposits being made that don't jive with your regular banking habits may put up a red flag.  That red flag would then have to be explained. 

 

• While you may want to buy furniture, that gorgeous new car, or the newest vacuum cleaner from Dyson, avoid any large purchases prior to your loan being closed.  If we have to re-verify your credit and another debt shows up that didn't at the time of the initial approval, it could kill the deal and your dream.

 

• If your loan approval requires you to pay off bills or back debt, DO NOT PAY THEM YOURSELF, CONTINUE TO MAKE ROUTINE PAYMENTS UNTIL YOUR LOAN CLOSES.   Just gather the most current monthly statements or most recent statement on a bad debt and get them to your loan officer.   That way the Title Company and Lender can make sure the debt is paid off in full. 

 

• If there is any change in your employment, notify your lender immediately!  While you may dislike your wise-ass boss or the people you work with, do not quit your job.  You can quit after the loan closes.  Then again, you'll need some source of income to pay your mortgage so don't quit your job (after the loan closes) until you have another lined up.

 

• Don't apply for any type of additional credit until your loan closes.

 

• Do not open or close any accounts you currently have on your credit.  Of note, closing an account that you have paid on time is not generally regarded as being too healthy for your credit score.

 

• Continue to make ALL of your payments as agreed, especially your mortgage even when you are refinancing your loan.  If your loan officer ever tells you not to make your mortgage payment, disobey that incompetent entity and find a new loan officer.  The only exception to this is if your loan is clear to close and your signing the papers the next day.  If you make any extra payments to your mortgage before closing, they will be applied to your pay-off or refunded to you from your former mortgage company.

 

• If your loan officer asks for documentation, they probably need it.  While you can question why they need it all day long, it is counter-productive to the common goal... your loan closing.

 

• This last piece of advice is one for anybody wanting to get pre-approved to buy a home.  Your loan officer will take a full application and run your credit and probably issue you a pre-approval for such and such amount of money to buy a home.  Do everyone involved a favor, supply all supporting documentation (pay-stubs, W-2's, bank statements, etc) as soon as possible.  That's a real pre-approval, my friends.  Sorry, I just had a John McCain moment:)  I see quite often that folks mistake what they actually make in income or have in the bank account.  If you supply them with everything, the full story is there.  When you supply the full story, it makes the lending decision easier to fund your book.

 

Make homeownership a wonderful dream, nightmares are better left to film and certain parts of the imagination.

 

Jason Sardi

Mortgage Consultant

Infinity Home Mortgage Company, Inc

Toll Free @ 1-866-262-8720 ext. 229

jsardi@ihmci.com (and think twice before you spam me, I can be deadly with words;)

 

Many of you by now have heard of the recent Housing Bill (H.R. 3221) that was signed by President Bush on July 30th, and goes into effect on October 1st, which made a $7,500 Tax Credit available to "First Time Home Buyer" who purchase a home between April 8, 2008 to July 1, 2009. A first-time homebuyer is defined as an individual who has not had an ownership interest in a principal residence in the previous three years. There is an income limit for individuals with adjusted gross income of no more than $75,000, and $150,000 on a joint return. Individuals with incomes greater than the $75,000 or $150,000, can still receive a partial Tax Credit if their individual income is below $95,000 and below $170,000 a joint return. This Tax Credit is also only available for a principle residence and is not available for investment properties, and the property must be located within the United States. Properties outside the United States are not eligible.

The Tax Credit works like this, if the "First Time Home Buyer" was going to receive a $1,000 refund when they file their Federal Tax Return in 2009, they will now be eligible for an additional $7,500 if they choose to receive it (it is not mandatory to receive the new tax credit, the First Time Home Buyer can decline to receive it). This means that their tax return will be $8,500 instead of $1,000. Likewise if they were going to have to pay $1,000, they would now receive $6,500.

This new Tax Credit is not a $7,500 gift, because it must be paid back within 15 years, however, it is interest free. The statute specifies that the repayment amount will be 6.67% of the credit amount each year. Thus, a buyer who qualifies for the full $7500 credit will repay a minimum of $502.50 each year starting with their 2010 tax return (which will be filed in 2011). If the purchaser sells the house before he/she has totally paid back the Tax Credit, the remainder will be due at the Closing and reduced from the proceeds of the sale. For example, if an individual still owes $3,000, and makes $30,000 on the sale of the house, the $30,000 profit will be reduced to $27,000 and $3,000 will be sent to the IRS.

There is an exception. "First Time Home Buyers" who meet the income requirements for this new Tax Credit, but who have a mortgage that is funded by "Tax Free Bonds", like the Connecticut Housing Finance Authority (CHFA), here in Connecticut, DO NOT qualify for the new Tax Credit. So a "First Time Home Buyer" needs to take this into consideration. What is more of a benefit to them, the low interest rate that CHFA offers, or the opportunity to receive a Tax Credit of $7,500.

Some of the initial advantages that I see that a "First Time Home Buyer" can gain from this new Tax Credit are:

• Mom and Dad might want to help with the purchase of the house, but don't want to outright give them the money. They now could quickly give Mom and Dad back up to $7,500 when they receive their tax return.

• Downpayment tends to be a big problem for "First Time Home Buyers", and most do not like taking money from their 401K's to come up with the money. Well now they could borrow the money from their 401K, knowing that they could quickly pay up to $7,500 within a few months.

• Houses sometimes need things done that a "First Time Home Buyer" might not have the money to do. Once again within a few months they will have up to $7,500 available to do some of those things.

I see this new Tax Credit as one of the few positives that have come out of the new Housing Bill, and one that I will be talking about with the Buyers, and Realtors that I work with here in Middlesex County. The other major positive that I feel the new Housing Bill has done, is the elimination of the DPA's such as Nehemiah and AmeriDream. But that is a topic for another day. By the way this does not eliminate the DPA programs such as the one provided by CHFA here in Connecticut.

I hope that this helps to shed some light on this new provision to those who have taken the time to read this blog. Please feel free to contact me if you have any questions on this program that I have not addressed, or if you should need clarification on anything I stated.