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Could My Loan Costs Exceed The Loan Estimate?
Yes, within defined limits.
Service charges for which YOU shop and select a provider may change; the creditor is NOT responsible for providers who are NOT on their written list.
In addition, prepaid interest, property insurance premiums and escrow or reserve deposits may change without legal tolerance limits.
Charges for recording services, and 3rd-party services ON the creditor list, grouped together may not exceed the Loan Estimate total for the same charges by more than 10%.
Transfer taxes, fees paid to the creditor, mortgage broker or an affiliate of either and fees paid to a 3rd party for services the creditor does NOT permit you to shop are ZERO tolerance and must match the Loan Estimate.
What Details Can I Ask Brokers In Advance?
This video tells you what any real estate professional would tell you. Ask them:
- How long do homes in my neighborhood currently stay on the market?
- How would you price my home?
- What data did you use to arrive at that price?
- How would you market my home?
- What activities would you expect of me to market my home?
- How will you handle representation if one of your buyers is interested in my home?
- May I speak with sellers you’ve recently represented?
- How long a period would you want on a listing agreement for my house?
It’s best to ask these questions, and be comfortable with your choices before signing a listing agreement.
What Makes Up Closing Costs?
What you’ll see in this video is, there may be closing costs customary or unique to a certain locality but closing costs are usually made up of the following:
- Attorney’s or escrow fees (Yours and your lender’s if applicable)
- Property taxes (to cover tax period to date)
- Interest (paid from date of closing to 30 days before first monthly payment)
- Loan Origination fee (covers lenders administrative cost)
- Recording fees Survey fee First premium of mortgage Insurance (if applicable)
- Title Insurance (yours and lender’s)
- Loan discount points
- First payment to escrow account for future real estate taxes and insurance
- Paid receipt for homeowner’s insurance policy (and fire and flood insurance if applicable)
And any documentation preparation fees.
What Costs or Fees Are Associated With Loan Origination?
Yes, loan origination involves costs and fees. As you’ll see in the video, when you turn in your application you’ll be required to pay a loan application fee to cover the costs of underwriting the loan. This fee pays for the home appraisal a copy of your credit report and any additional charges that may be necessary.
The application fee is generally non-refundable.
How Does The Interest Rate Factor In Securing A Mortgage Loan?
As you’ll see in the video, a lower interest rate allows you to borrow more money than a high rate with the some monthly payment.
Interest rates can fluctuate as you shop for a loan so ask lenders if they offer a rate “lock-in” which guarantees a specific interest rate for a certain period of time.
Remember that a lender must disclose the Annual Percentage Rate (APR) of a loan to you. The APR shows the cost of a mortgage loan by expressing it in terms of a yearly interest rate. It is generally higher than the mortgage interest rate because it also includes the cost of points, mortgage insurance and other fees included in the loan.
What Questions Should I Ask When Looking At Homes?
As you’ll see in this video, many of your questions should focus on potential problems and maintenance issues.
Does anything need to be replaced? What things require ongoing maintenance like paint, roof, heating and AC, appliances and carpet?
Also ask about the house and neighborhood focusing on quality of life issues. Be sure the seller’s or real estate agent’s answers are clear and complete.
Like the video says, ask questions until you understand all of the information they’ve given.
Making a list of questions ahead of time will help you organize your thoughts and arrange all of the information you receive. The HUD Home Scorecard can help you develop your question list and keep a record for each potential home.