HUD is requiring that loan originators provide borrowers with a standard Good Faith Estimate that clearly discloses key loan terms and closing costs and fees.  Loan originators must provide borrowers with a new HUD-1 settlement statement. The new 3-page form will allow the borrower to compare loan terms and make a more informed decision.

Of key interest are the fees.  Typically, a loan has 2 types of fees : origination fees or the fees associated with the lender providing the loan and settlement fees/closing costs or the title fees, appraisal fees, etc.  In the past the fees were an estimate and open to many surprises.  Now, the fees must be exact.  If the borrower accepts the loan as presented, the lender must provide the loan with the costs listed. NO SURPRISES.

If the lender provides services, they must be charged within 10% of what was listed. So if an appraisal is $500, it must cost no more than $550.

The new form will have a page that clearly lists the initial loan amount, the term length in years, the monthly payment, the initial interest rate, and whether that interest rate can rise plus any prepayment penalties or balloon payments. 

There’s also a “shopping chart” on the third page in which up to four different deals can be placed side-by-side and their costs easily compared.

For more information contact: Mary Lou Yoch, Frost Mortgage Lending, (949) 584-8865

Hurry!  Hurry ! Hurry!  If you want to refinance your mortgage into a loan with a sub-5% interest rate, your window of opportunity is closing fast.

Lenders are still advertising rock-bottom interest rates, but for most borrowers, rates are rapidly rising into the 5%-plus category.  We may not see below 5% again.

We saw 4.75% loans at the end of the year, but now the rates are significantly higher. If you want a low mortgage rate that is at least a point or two less than you currently are paying, you need to lock a loan NOW.  Otherwise, the cost of the refinance will wipe out any savings you would get.

March 31^st seems to be the deadline.  The Federal Reserve has been  purchasing loans since 2009.  The lenders could keep the rates low, because they new they could sell the loans to the FEDS.  However, this program will end on March 31,2010.   All the private investors in the marketplace will be buying these loans and they will want higher rates.   So as the FED reduces and winds down the purchases of mortgage backed loans as securities, the rates will start to climb.

For more information contact: Mary Lou Yoch, Frost Mortgage Lending, (949) 584-8865