Items Required by Lender to Be Paid in Advance is a section of the Good Faith Estimate that lists the items that are required to be paid in advance. The Good Faith Estimate is a RESPA required document. These items are identified with a number in the 900s. Because of the numbering this section is often called the 900 Section.
***This is a list of the most common fees listed in the 900 Section of the GFE. The fees associated with a specific loan may change. Actual fees may be more or less depending on the time of year, or even time during the month, that the loan closes.
901 - Prepaid Interest: is prepaid interest charged for the loan. This fee will vary and depend on the date of the month the loan is closed.
902 - Mortgage Insurance Premium:is prepaid mortgage insurance premium (MIP). This fee is only charged if the borrower has to pay MIP, usually charged for loans with very little equity in the property being used as collateral.
903 - Hazard Insurance Premium: is the hazard insurance, or homeowner's insurance, being prepaid. Most lenders require that the insurance policy be in force one full year from the date of closing.
These are only a sample of the most common fees and costs in the 900 Section of the GFE.
As you can imagine, there more information than I can put here. If you would like more information about fees on a GFE or items discussed in this section please send me an email to dustin.burke@adonaifinancial.com.
"Adonai Financial, your friends in the mortgage business!"
Items Payable In Connection With Loan, often referred to as the 800 Section of the GFE, is typically the first section listed on the Good Faith Estimate (GFE) and includes most fees directly associated with obtaining the loan from the lender, broker, or bank.
Loan charges and costs listed in this section are typically identified with a number in the 800 and most charges associated in this section are figured into the Annual Percentage Rate (APR) on the Truth-in-Lending Disclosure.
***This is a list of the most common fees listed in the Items Payable In Connection with Loan section of the GFE. The fees associated with a specific loan may change from program to program. Actual fees may be more or less depending on the loan program.
801 - Loan Origination Fee: a fee charged by the lender or bank for originating or creating the loan. Many times this fee and the Loan Discount Fee are referred to as "points". Please review an article called Florida Mortgages |When Paying Points Makes Sensefor more information on paying points.
802 - Loan Discount Fee: a fee charged to the lender or bank to get a lower mortgage rate. Many times this fee and the Loan Origination Fee are referred to as "points". Please review an article called Florida Mortgages |When Paying Points Makes Sensefor more information on paying points.
803 - Appraisal Fee: a fee charged to pay the cost of an independent appraiser.
804 - Credit Report Fee: a fee charged to pay the cost of the credit report.
805 - Lender's Inspection Fee: a fee charged by the lender for the cost of inspecting a property. Some lenders call this an appraisal field review where the appraisal is double checked by the lender for accuracy.
808 - Mortgage Broker Fee: an upfront fee charged by a mortgage brokerage business. In rare cases this fee is identified as points and has the same effect as points. Please review an article called Florida Mortgages |When Paying Points Makes Sensefor more information on paying points.
809 - Tax Related Service Fee: a fee charged by the lender to pay the costs of handling tax related matters. This fee is typically very small.
810 - Processing Fee: an administration fee charged for processing the loan (i.e. collecting application details, collecting underwritings requirements, ordering inspections, title, etc.)
810 - Underwriting Fee: an administration fee charged for underwriting the loan.
812 - Wire Transfer Fee: a fee charged for the costs of wiring money on the borrowers' behalf.
These are only a sample of the most common fees and costs in the 800 Section of the GFE. Other fees may include courier fees, MERS registration fees, electronic storage fees, etc.
As you can imagine, there more information than I can put here. If you would like more information about fees on a GFE or items discussed in this section please send me an email to dustin.burke@adonaifinancial.com.
"Adonai Financial, your friends in the mortgage business!"
The Real Estate Settlement Procedures Act (RESPA) requires that mortgage lenders and brokers provide a Good Faith Estimate (GFE) to customers who apply for certain RESPA regulated loans. A GFE is a itemization of expected loan costs and fees associated with the loan and must be provided to the customer within 3 business days of application.
The GFE is only an estimate and the final costs and fees may be different. The GFE itemizes the fees and costs into six basic headings with each line item cost having a specific number associated with the fee or costs.
This is a list of the six sections of the GFE and link with extensive descriptions on each section and many of the fees included in those sections.
Items Payable In Connection With Loan is typically the first section listed on the Good Faith Estimate and includes most fees directly associated with obtaining the loan from the lender, broker, or bank.
Reserves Deposited with the Lender are prepaid fees that are collected by the lender to pay at a later date and are typically called escrow items.
Title Charges are fees associated with the title of the property and closing of the loan
Government Recording & Transfer Costs are fees associated with government costs of the transaction which may include recording fees, stamps on the deed and mortgage, etc.
Additional Settlement Charges are charges that do not appear in the other fives sections of the Good Faith Estimate.
Articles have been (or soon will be) written regarding each section of the GFE with their respective costs. As you can imagine there is a lot of information available through the links above. If you need assistance with a specific fee on the GFE please send me an email at dustin.burke@adonaifinancial.com.
"Adonai Financial, your friends in the mortgage business!"
When an individual applies for a mortgage loan the bank, lender, or mortgage broker is required to provide the borrower with certain disclosures. This is a directory of many of those disclosures. Some forms have a link where you may view the form with a detailed description.
Tax Return Request - Copy of Transcripts: Form 4506-T
Truth-in-Lending
Servicing Disclosure Statement
This list is a basic summary of the most common mortgage forms used in the Florida market. External links are consistently being added to update the descriptions on these forms. If a link is not currently available for a form you are interested in please email me for to get more information at dustin.burke@adonaifinancial.com.
"Adonai Financial, your friends in the mortgage business!"
The Real Estate Settlement Procedures Act, (also know as "RESPA"), was an Act passed by Congress in 1974.
RESPA was created because various companies associated with the buying and selling of real estate, such as lenders, real estate firms, appraisers, and title insurance companies, etc., were often engaging in providing undisclosed kickbacks to each other.
It is believed that these kickbacks inflated the costs of real estate transactions and obscured price competition by promoting bait and switch tactics.
For example, a lender advertising a home loan might have advertised the loan with a 5% interest rate, but then when one applies for the loan one is told that one must use the lender's affiliated title insurance company and pay $5,000 for the service (whereas the normal rate is $1,000). The title company would then have paid $4,000 to the lender. This was made illegal.
Section 8 of the Act forbids kickbacks between lenders and third-party settlement service agents in the real estate settlement process. The Act, among other things, requires lenders to provide a good faith estimate for all the approximate costs of a particular loan and finally a HUD-1 (for purchase real estate loans) or a HUD-1A (for refinances of real estate loans) at the closing of the real estate loan. The final HUD-1 or HUD-1A allows the borrower to know specifically the costs of the loan and to whom the fees are being allotted.
If you have any general questions on what acts RESPA requires of mortgage business please feel free to send me an email to dustin.burke@adonaifinancial.com.
"Adonai Financial, your friends in the mortgage business!"
We are very excited and please to announce we are now able to offer STATED INCOME loans to Foreign National clients with a down payment of 30% in central Florida. This includes loans secured by condotels. This is an increase in loan to value of 10% over our previous product offering. Stated income loans to foreign nationals were previously restricted to 60% LTV in central Florida on most loan amounts.
Full documentation loans are still available at 75%. Condotel loans are not available on this program.
If you have any questions about the new loan guidelines please contact our office at 863-680-2700 or send me an email to dustin.burke@adonaifinancial.com.
***Disclaimer: this is not an offer or commitment to lend by Adonai Financial Corporation - the borrower must meet all underwriting conditions required prior to the issuance of a loan commitment.
"Adonai Financial, your friends in the mortgage business!"
I recently read a post by Christopher Hill titled "Do I pay a point or not?" I work with clients from all over the world and the American's have been taught NOT to pay points, while the remainder of the clients I work with WANT to pay points. I posted a blog on "ARM or not to ARM?" where I also stated that Americans wanted a 30 year fixed and not an ARM while clients from abroad wanted the opposite.
Points, just like ARM loans, must be used correctly. Here are SIX real life examples - three on fixed rate mortgages / three on ARM mortgages.
***When a borrower chooses NOT to pay points then we will apply what he/she would have paid for the point(s) and place it toward the loan amount.
Fixed Rate Mortgage Examples: this real life example is based on a 30 year fixed.
Option 1 - In this option the borrower is paying 2 pts and getting the lowest rate.
Interest paid after:
Total Cost w/ points
Costs vs. Option 2
Costs vs. Option 3
Loan Amount:
$300,000
12 mo: $17,899
$23,899
+2094
+4150
Rate:
6%
24 mo: $35,572
$41,572
+1154
+2292
Points:
2 ($6000)
36 mo: $53,003
$59,003
+211
+425
Payment
$1,798
48 mo: $70,178
$76,178
-735
-1448
60 mo: $87,082
$93,082
-1683
-3325
Option 2 - In this option the borrower is paying 1 pt and taking a slightly higher rate.
Interest paid after:
Total Cost w/ points
Costs vs. Option 1
Costs vs. Option 3
Loan Amount:
$297,000
12 mo: $18,835
$21,805
-2094
+2056
Rate:
6.375%
24 mo: $37,448
$40,418
-1154
+1138
Points:
1 ($2970)
36 mo: $55,822
$58,792
-211
+214
Payment
$1,852
48 mo: $73,943
$76,913
+735
-713
60 mo: $91,795
$94,765
+1683
-1614
Option 3 - In this option the borrower is not paying points and will take the highest rate of the three Fixed Rate options.
Interest paid after:
Total Cost w/ points
Costs vs. Option 1
Costs vs. Option 2
Loan Amount:
$294,000
12 mo: $19,749
$19,749
-4150
-2056
Rate:
6.750%
24 mo: $39,280
$39,280
-1138
-1138
Points:
0
36 mo: $58,578
$58,578
-425
-214
Payment
$1,906
48 mo: $77,626
$77,626
+1448
+713
60 mo: $96,407
$96,407
+3325
+1614
Fixed Rate Assessment: It appears that Option 1 is best if the borrower is going to keeping the loan for 3+ years. Option 3 appears best if the borrower is going to keep the loan for less than 3 years. And Option 2 will save the borrower on upfront expenses vs. Option 1 and give the borrower a lower monthly payment than Option 3.
From my vantage point, for an investment longer than 3 years Option 1 appears to be the best of the Fixed Rate Mortgage Options. For a short term investment Options 3 appears to be the best choice.
Adjustable Rate Mortgage Examples: this real life example is based on a 5/1 ARM.
Option 4 - In this option the borrower is paying 2 pts and getting the lowest rate.
Interest paid after:
Total Cost w/ points
Costs vs. Option 5
Costs vs. Option 6
Loan Amount:
$300,000
12 mo: $13,775
$18,775
+313
-1601
Rate:
4.625%
24 mo: $27,327
$32,327
+1403
+1798
Points:
2 ($6000)
36 mo: $40,654
$46,654
+2106
+4185
Payment
$1,542
48 mo: $53,727
$59,727
+3813
+7576
60 mo: $66,533
$72,533
+5523
+10968
Option 5 - In this option the borrower is paying 1 pt and taking a slightly higher rate.
Interest paid after:
Total Cost w/ points
Costs vs. Option 4
Costs vs. Option 6
Loan Amount:
$297,000
12 mo: $15,492
$18,462
-313
-1288
Rate:
5.25%
24 mo: $30,760
$33,730
-1403
+395
Points:
1 ($2970)
36 mo: $45,790
$48,760
-2106
+2079
Payment
$1,640
48 mo: $60,570
$63,540
-3813
+3763
60 mo: $75,086
$78,056
-5523
+5445
Option 6 - In this option the borrower is not paying points and will take the highest rate of the three ARM options.
Interest paid after:
Total Cost w/ points
Costs vs. Option 4
Costs vs. Option 5
Loan Amount:
$294,000
12 mo: $17,174
$17,174
+1601
+1288
Rate:
5.875
24 mo: $34,125
$34,125
-1798
-395
Points:
0
36 mo: $50,839
$50,839
-4185
-2079
Payment
$1,739
48 mo: $67,303
$67,303
-7576
-3763
60 mo: $83,501
$83,501
-10968
-5445
ARM Assessment: It appears that Option 4 is best if the borrower is going to keeping the loan for 1+ year(s). Option 6 appears best if you are going to keep the loan for less than 1 year. And Option 4 has not real substantive advantage over Option 4 or 6.
From my vantage point Option 4 appears to be the best of the ARM Options. For a very short term investment Options 6 appears to be the best choice.
Best overall: Given that most mortgage loans are paid off every 3 - 5 years either by refinances or the sale of the property Option 1 and Option 4 seems to be the best. Both options also pay the most points.
And, after further evaluation Option 4 offers savings over Option 1 of $12,349 after 36 months, $16,451 after 48 months, and $20,549 after 60 months. So, if a borrower can risk the rate adjustment I would typically recommend Option 6 - an ARM with points.
What are you thoughts on points? Do you agree or disagree? Let me know by sending me an email to dustin.burke@adonaifinancial.com.
"Adonai Financial, your friends in the mortgage business!"
Since the real estate boom went bust a new term has reared its head into the real estate professional's vernacular. It's the term soft market. Soft markets are often the result of having too many sellers and not enough buyers in real estate market which often drives home prices lower. When prices drop from one calendar quarter over another the market is defined by banks as a depreciating market or a soft market.
When a specific MSA or even ZIP code is labeled with the stigma of being soft banks and mortgage typically implement lending policies that are more restrictive such as requiring a higher down payment on a house, etc.
From my observation soft market policies typically impact the less affluent first. A potential buyer in an economically distressed area typically has less liquidity proportional to their income than a potential buyer purchasing a home in a more affluent area. Therefore the buyers with lesser means are often pushed out of the market whereas a buyer with greater means isn't so drastically affected by the soft market policies. The end result is the markets with less means are often hurt more.
We already know that soft markets are a direct result of too many sellers and not enough buyers. When banks and mortgage lenders implement soft market policies that restrict the number of potential buyers it further accelerates the problem with declining values.
These soft market policies act as a double edged sword. They are put in place to curb the banks and mortgage lenders exposures to potential risks but they also hasten the problem of declining values. So, what to do? Well, we've all heard of these huge write downs that major banks have taken as losses on mortgages. Since the banks have already written down the "bad debt" and I think they should take action that would work to stabilize the market rather than destabilize it.
Mortgage companies and banks made billions during the boom and have suffered severe losses because of the bust. I'm not sure exactly what to do about the declining values in certain areas, but don't think that restricting liquidity further is the answer. If anything, easier money would start to curb the problem.
What do you think should be done to help curb the problem in declining markets? Do you think soft market policies are the answer? Feel free to let me know by sending me an email to dustin.burke@adonaifinancial.com.
"Adonai Financial, your friends in the mortgage business!"
Foreign Nationals are individuals from other countries who purchase or refinance property in the United States. The property can be a commercial property or a residential property. Domestically the foreign national market has grown due to the weakened US dollar. The cheaper dollar makes US property very attractive to individuals from abroad.
Can a foreign national still get a dollar mortgage for a property the desire to purchase or refinance in the US? Yes, and it is easier than one may think.
Residential mortgages for foreign nationals are available on terms similar to the terms available to those with legal status in the US. Both fixed rate mortgages and adjustable rate (variable rate) mortgages are offered to citizens abroad. Interest rates are competitive starting as low as the high 5’s on some programs.
The documentation required on residential mortgages will very from bank to bank and bank program to bank program. The larger the down payment the less documentation that may be required. The minimum down payment required is typically 20 – 25% and requires proof of employment, income, assets, etc.
If an individual prefers they may choose a program that does not require documentation of employment, income, assets or even a credit report. These loans are called state, limited, reduced, or no documentation loans. These loans facilities typically require a down payment of 30% or more (rarely more than 40%). Down payment and documentation requirements can even depend on the type of property (house, condo, etc.) and even the specific neighborhood. An area that is considered a “soft market” may require a higher down payment.
As you can imagine there is a lot more information available than can be placed here. If you would like to get more information or have any specific questions on loans for foreign nationals, or any residential mortgage loan, please feel free to contact me -- I’d be glad to answer any questions you have.
As a local and small business owner I tend to try and support the same hoping that other small business owners will return the favor. Its my way of putting that “Do unto others” mentality into practice. I am also one of those people who like to find those special hideaways that few people know about.
The Antiquarian Restaurant at 211 E Bay Street in downtown Lakeland is just one of those places. The menu is continental and the atmosphere is eclectic. The food is always unmatched in preparation.
The portions are not over filling and leave you satisfied – not stuffed. You can expect to spend $10/person at lunch at $25+/person for diner. Its a friends, white table cloth environment. There is live jazz music on Friday nights and the ambience offers just what you need to enjoy a 5-star dinner.
It is well worth the price and you’re investing back into the downtown Lakeland community. They also have an extensive wine selection that raises the bar and a friendly staff and ownership.
Have you dined at the Antiquarian? Do you know of any hideaways in Lakeland? Let me know by sending me an email to dustin.burke@adonaifinancial.com.
"Adonai Financial, your friends in the mortgage business!"
Disclaimer: ActiveRain Corp. does not necessarily endorse the real estate agents, loan officers and brokers listed on this site. These real estate profiles, blogs and blog entries are provided here as a courtesy to our visitors to help them make an informed decision when buying or selling a house. ActiveRain Corp. takes no responsibility for the content in these profiles, that are written by the members of this community.
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