“No Closing Costs” Loan?  Think Again.

I recently had two clients opt to use an online lender rather than me for their financing.  The reason?  They believed they were going to get a VERY low interest rate AND pay “no closing costs”.  That’s right.  Gonna buy a home with nothing more out of pocket than the down payment!

I explain to clients that, with extremely rare exceptions, the only way to avoid or minimize closing costs is through the lender credit associated with the interest rate.  The higher the rate, the higher the borrower’s credit for closing costs. 

Face it—the title company doesn’t work for free.  Impounds must be prepaid.  The hazard insurer doesn’t give away free policies.  These costs must be paid, either directly by the consumer at closing or via a lender credit associated with the rate.

So where are home buyers getting the idea that they can buy a home bringing in only the amount of the down payment while getting an extremely low interest rate?

Let’s look at CashCall as an example.  As of today, their Web site reads:

Today's Advertised Special - "No Closing Costs"

3.99% / 3.99% APR

Today's low 30 year fixed rate as of 01-06-12

Apply Online or Call Now!

1-866-708-LOAN (5626)

Click for loan assumptions   Click for No Closing Costs disclosures

Great rate!  And no closing costs! 

But notice there’s a link to closing costs disclosures.  The disclosures say:

'No Closing Costs' loans

The following Fees are covered on a 'No Closing Costs' loan.

On purchase transactions the 'No Closing Costs' option covers the cost of the appraisal fee, credit report fee, flood certification fee and tax service fee. The borrower is responsible for paying all title fees, escrow/closing fees, notary/signing fees, prepaid interest, property taxes, state mortgage taxes, insurance, mortgage insurance and recording fees.

Uh-oh.  Looks like you are paying closing costs after all!

But there is more in those disclosures:

Please note that for the 30 Year No Closing Costs 3.99% and 10 Year No Closing Costs 2.99% advertised rate specials, the following pricing adjustments apply: Loan amounts from $300k to $417k priced as shown. Loan Amounts $250k-$299,900 add .135 to rate. Loan Amounts $200k - $249,900 add .26 to rate. Loan Amounts $150k to $199,900 add .385 to rate.

So, unless you are financing $300,000 or more, you aren’t getting the advertised 3.99% rate.

The lesson here is not to trust your largest financial transaction to a person working in a Web site’s call center.  Find a reputable person in your state who can be reached during and after business hours by cell phone.  They will provide you a no fine print rate quote customized to your specific financial situation.  

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Got questions about this post?

Buying or refinancing a home?

Call me!

 

Ed Gillespie

(916) 849-9200

 

FHA, Conventional, Jumbos, USDA and Specialty Mortgages

Serving Greater Sacramento and All of California

Subscribe to my blog!

 

 

 

 

Content in this blog is original to Ed Gillespie and does not reflect the views of Academy Mortgage, nor is intended to be legal advice.

 

  Copyright 2008-2011 by Ed Gillespie | DRE #01424603 | NMLS #244226 | All Rights Reserved

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What It REALLY Costs to Get a Roseville Mortgage

Recently, I have had a few clients be shocked at closing cost quotes I have given them.  On each, I went back and checked my numbers very carefully and, yes, the quotes were right!  The client just didn’t realize that there were many costs associated with a home purchase! 

No one wants any unpleasant surprises that involve money!  So, here is some information on closing costs to help you better prepare for a home purchase.

In addition to a down payment, home buyers should anticipate these possible costs:

Home Inspection

An inspector will review the mechanical, electrical, and structural aspects of your home then provide a written report.

Condominium/Home Owners Association-related Fees

These may be required if you purchase a home in a condominium complex. 

Well and/or Septic Certifications

If the property has either of these systems, a buyer will want professional testing to ensure they function properly.

Pest Inspection

A qualified professional inspects the property, looking for termites and other pests and pest damage then submits a report.

These costs are common in a purchase transaction:

Credit Report

This fee covers the cost of a three bureau credit report which shows each borrowers’ credit history.  The borrowers will be provided a copy of their credit report.

Appraisal

An appraisal is a professional opinion about the value of your home, prepared for the lender. The appraisal is usually paid for up-front by the borrower.  And, in a few cases, more than one appraisal may be required.  Buyers receive a copy of the appraisal.

Title and Escrow services, such as title search and insurance, so buyer and lender are sure that no one else has any lien, claim, or encumbrance on the property; recording the Deed and mortgage with the County Recorder; Notary for signing services; and, preparing documents necessary to close a real estate transaction.

Lender’s Origination Services

For services involved in the creation of a mortgage loan, such as loan processing and the underwriting of the loan.

Property Taxes

Payable to the County.  The amount collected depends upon the month of the year the property sale closes.

Insurance

Lenders typically require the first year of fire and hazard insurance be paid up front.  Flood insurance will be required if the house is in a flood hazard area.

Impounds (also call Reserves)

Prepayments of funds, held in an account, to cover annual charges for homeowner’s insurance and property taxes which will be paid by the lender on the borrower’s behalf.  Sums will be added to the impound account each month from the monthly mortgage payment.

Prorated Mortgage Interest

Depending upon the time of month a loan closes, this per diem charge may vary from a full month’s interest to a few days interest.  Future interest payments will be made through the monthly loan payment.

Supplemental Property Taxes

The buyer will be billed by the County for these, by mail, after the sale closes.  Supplemental taxes that are assessed due to a change in ownership. 

The amount of closing costs varies, depending upon the amount of the mortgage and type of loan (i. e., VA, FHA, USDA or Conventional).  A mortgage professional can provide an estimate of costs when a potential buyer completes the prequalification process.

What if you don’t have enough money for closing costs?  Consider a gift from a family member or participating in a down payment assistance program.

Related Posts:

Shopping for a Hazard Insurance Policy

A Lesson about Hazard Insurance in California

Making Sure Your Cash to Close Comes from the Proper Source

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Got questions about this post?

Buying or refinancing a home?

Call me!

 

Ed Gillespie

(916) 849-9200

 

FHA, Conventional, Jumbos, USDA and Specialty Mortgages

Serving Greater Sacramento and All of California

Subscribe to my blog!

 

 

 

 

Content in this blog is original to Ed Gillespie and does not reflect the views of Academy Mortgage, nor is intended to be legal advice.

 

  Copyright 2008-2011 by Ed Gillespie | DRE #01424603 | NMLS #244226 | All Rights Reserved

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Help for California Homeowners with Financial Hardships  

If you are a homeowner experiencing financial hardship, the California Housing Finance Authority (CalHFA) might be able to help!

CalHFA has a mortgage assistance program called “Keep Your Home California”, a federally funded initiative for low- and moderate-income homeowners who are delinquent or facing default on their primary residence.  The program has four components: 

Unemployment Mortgage Assistance*

For homeowners receiving California EDD Unemployment, mortgage payment assistance up to $3,000 per month for up to nine months. 

Mortgage Reinstatement Assistance*

One time payment of up to $20,000 for principal, interest, taxes, insurance and HOA dues for those who have fallen behind on their first mortgage. 

Principal Reduction*

Funds to be matched, dollar for dollar, by the loan servicer (the company to which the monthly payment is made each month) for loan principal reduction.  (For mortgages originated before 1/1/09) 

Transition Assistance*

One time funds up to $5,000 for homeowners involved in a short sale or deed in lieu of foreclosure.

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Got questions about this post?

Buying or refinancing a home?

Call me!

 

Ed Gillespie

(916) 849-9200

 

FHA, Conventional, Jumbos, USDA and Specialty Mortgages

Serving Greater Sacramento and All of California

Subscribe to my blog!

 

 

 

 

Content in this blog is original to Ed Gillespie and does not reflect the views of Academy Mortgage, nor is intended to be legal advice.

 

  Copyright 2008-2011 by Ed Gillespie | DRE #01424603 | NMLS #244226 | All Rights Reserved

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CHASE Hosts Ontario Event for Mortgage Customers Needing Assistance, November 17-19

For a non-hardship refinance, please call me at (916) 849-9200.

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Got questions about this post?

Buying or refinancing a home?

Call me!

 

Ed Gillespie

(916) 849-9200

 

FHA, Conventional, Jumbos, USDA and Specialty Mortgages

Serving Greater Sacramento and All of California

Subscribe to my blog!

 

 

 

 

Content in this blog is original to Ed Gillespie and does not reflect the views of Academy Mortgage, nor is intended to be legal advice.

 

  Copyright 2008-2011 by Ed Gillespie | DRE #01424603 | NMLS #244226 | All Rights Reserved

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BofA Hosts Sacramento Event for Mortgage Customers Needing Assistance, November 17-19

For more information, see page 2.

For a non-hardship refinance, please call me at (916) 849-9200.

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Got questions about this post?

Buying or refinancing a home?

Call me!

 

Ed Gillespie

(916) 849-9200

 

FHA, Conventional, Jumbos, USDA and Specialty Mortgages

Serving Greater Sacramento and All of California

Subscribe to my blog!

 

 

 

 

Content in this blog is original to Ed Gillespie and does not reflect the views of Academy Mortgage, nor is intended to be legal advice.

 

  Copyright 2008-2011 by Ed Gillespie | DRE #01424603 | NMLS #244226 | All Rights Reserved

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Greece, the Fed and Inflation—Oh, My! How Do We Get Mortgage Interest Rates?

First, here’s how we don’t:

There are three common misconceptions about how mortgage rates are determined: 1) solely by each lender, 2) by the Federal Reserve and/or 3) based on the 10-Year Treasury Note.  There are still mortgage professionals claiming rates are based on the 10-Year Note.  Wrong!

Now, here’s how we do:

While there are several generic interest rate trend indicators, rates can be influenced at any given moment by at numerous different variables in the market and with each individual loan approval scenario. The mortgage rate marketplace is dynamic and complex. 

Lenders set their rates every day based on the market activities of Mortgage Bonds, also known as Mortgage Backed Securities (MBS).  A lender might adjust their pricing up to five times in one day depending on what’s taking place in the market. A printed rate sheet can become obsolete the moment it is printed!

So what are the major influences on Mortgage Backed Securities (MBS)?

1. Inflation
2. Federal Reserve Actions
3. Unemployment Figures
4. Gross Domestic Product (GDP) Figures
5. Geopolitics – Unforeseen events related to global conflict and political events

Why does this matter to you?

With multiple market indicators reporting and changing throughout any given day, timing the market for the best possible opportunity to lock a mortgage rate on a new loan is a big challenge. Top notch professionals have access to real time market data and expert analysis to guide them.  Don’t work with a lender that doesn’t!  Why?  Because your loan’s interest rate determines the amount of lender credit you will receive for your closing costs!  Locking an interest rate too early or too late can be an expensive error for which YOU end up paying! 

Home shopping or refinancing and want to learn more about interest rates?  Watch this video!  For more information and a real time look at the mortgage market, please call me at (916) 849-9200!

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Got questions about this post?

Buying or refinancing a home?

Call me!

 

Ed Gillespie

(916) 849-9200

 

FHA, Conventional, Jumbos, USDA and Specialty Mortgages

Serving Greater Sacramento and All of California

Subscribe to my blog!

 

 

 

 

Content in this blog is original to Ed Gillespie and does not reflect the views of Academy Mortgage, nor is intended to be legal advice.

 

  Copyright 2008-2011 by Ed Gillespie | DRE #01424603 | NMLS #244226 | All Rights Reserved

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Roseville’s New “Party Place” is Great for Kids and Grown Ups Alike!  

The Party Place is Roseville’s newest and best play and party destination! 

They are open for Open Play Monday - Friday from 10:00am-2:00pm and Thursdays from 4-7:30 pm.  The cost is $5 per child over 18 months, parents and children under 18 months are free! There are two bounce houses, play structure with slide, arcade games on free play, and Wii center with over 80 games.  

And they always have complimentary Starbucks Coffee, Cappuccino and WiFi for the grown ups!

The Party Place has several party options, which are available during any private party time slot. Multiple slots can always be booked together to expand your party time.  Perfect for birthdays and sports team parties! 

Catering arrangements, magician and party planning assistant also available.

And the Party Place is not just a gathering place for kids!  The park-themed room is available for weddings, showers, corporate meetings, or luncheons! 

The Party Place can accommodate groups up to 75.  And you can even…. 

 …bring your own food!

 For more info, call the Party Place at (916) 521-9728.

 Don’t forget your sox!

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Got questions about this post?

Buying or refinancing a home?

Call me!

 

Ed Gillespie

(916) 849-9200

 

FHA, Conventional, Jumbos, USDA and Specialty Mortgages

Serving Greater Sacramento and All of California

Subscribe to my blog!

 

 

 

 

Content in this blog is original to Ed Gillespie and does not reflect the views of Academy Mortgage, nor is intended to be legal advice.

 

  Copyright 2008-2011 by Ed Gillespie | DRE #01424603 | NMLS #244226 | All Rights Reserved

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Trunk or Treat in Roseville, Saturday, October 22nd

Come join the fun at the Trunk or Treat Harvest Festival in Roseville on Saturday, October 22, from 5-9 pm!  It’s FREE!

This event features:

·       Bounce houses

·       Face painting

·       Candy

·       Games

·       Bake sale

·       Live music by "Karma Jazz"

Bring your family and friends and wear your favorite costume!

For more information, call The Party Place at (916) 521-9728.

Trunk or Treat Harvest Festival

October 22, 2011

5-9 pm

@The Party Place

8413 Washington Blvd. #145

Roseville, CA 95678

(916) 521-9728

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Got questions about this post?

Buying or refinancing a home?

Call me!

 

Ed Gillespie

(916) 849-9200

 

FHA, Conventional, Jumbos, USDA and Specialty Mortgages

Serving Greater Sacramento and All of California

Subscribe to my blog!

 

 

 

 

Content in this blog is original to Ed Gillespie and does not reflect the views of Academy Mortgage, nor is intended to be legal advice.

 

  Copyright 2008-2011 by Ed Gillespie | DRE #01424603 | NMLS #244226 | All Rights Reserved

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Every First-Time Home Buyer Needs a Team!

A Sacramento home purchase is literally a team sport since there are so many tasks, important timelines, documents and responsibilities that all need special care and attention. It's important that every Sacramento first-time home buyer have a team they can trust and that the individual players have the ability to effectively communicate and execute  important tasks together.

Real Estate Agent

A Realtor® is a licensed agent that belongs to the National Association of Realtors®, which means they are pledged to a strict Code of Ethics and Standards of Practice.

A few of the important roles your agent performs for you:

• Determine your home buying needs
• Define your property search criteria - neighborhoods, school districts, local amenities...
• Provide insight on market trends and property values
• Negotiate purchase contract
• Monitor due-diligence periods and other important timelines
• Articulate inspection and appraisal reports
• Professionally estimate fair market value on listings

A common misconception among many Sacramento first-time home buyers is that hiring a real estate agent will end up costing more money.  However, the typical arrangement in a purchase transaction is for the seller to cover the buyer's agent commission.  Even if you are buying a developer home or For Sale By Owner property, you should still have an agent in your corner to protect your interests.

Mortgage Professional

A Sacramento mortgage professional establishes the purchase price and monthly payment a borrower can qualify for. Other details your mortgage professional handles:

• Explain all loan program options that may fit your investment goals
• Collecting / organizing loan approval documents
• Watching economic indicators that influence daily rate changes
• Locking interest rates
• Communicating with title / escrow officers
• Submitting loan package to underwriting departments
• Updating disclosures / GFE paperwork within proper time frames
• Following funding through to the final recording

Insurance Agent

The lender in any mortgage transaction will require a homeowner’s insurance policy (hazard insurance). This policy protects the property in the case of fire, theft or other damage (except flood or earthquake, which are separate).  If it is determined that the property that you want to purchase is in a flood zone, flood insurance is mandatory.

Title and Escrow

The title and escrow officers are often thought of as the same role, but in reality are quite different positions.  The title officer takes care of all issues that have to do with the title of the property.  They issue a title insurance policy guaranteeing that the title is free and clear of all liens except those being filed by the lender.

Escrow takes care of receiving, signing, and notarizing the final loan documentation, as well as collecting the other paperwork associated with the home sale.  The escrow officer is a neutral third party that makes sure no money is transferred until all conditions for each side are met. The money management of an escrow company include:

• Real estate commissions
• Funds to mortgage company
• Homeowner's Insurance Premiums
• Property Taxes
• HOA Dues and other third-party fees

Finally, the escrow officer will see that you are properly recorded as the new owner with the county.

Appraiser

While a Sacramento first-time home buyer does not see the appraiser, an appraisal is obviously an important component of a home purchase transaction.  The appraiser will conduct an analysis of the property to determine the current market value. The bank will almost always require an appraisal, and in some cases a second opinion of value if the program guidelines or loan amount require it.

Appraisers compare the sales prices of similar properties sold in the neighborhood and surrounding areas with the subject property. This can be a very tricky process, especially if there are few properties to choose from, or if there is an overwhelming amount of foreclosures and short sale listings, and since two homes are rarely identical.

When done, the estimate of value is given. If that value is below the purchase price, then negotiation may take place. If it is at or above the purchase price, we are ready to go forward!

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Got questions about this post?

Buying or refinancing a home?

Call me!

 

Ed Gillespie

(916) 849-9200

 

FHA, Conventional, Jumbos, USDA and Specialty Mortgages

Serving Greater Sacramento and All of California

Subscribe to my blog!

 

 

 

 

Content in this blog is original to Ed Gillespie and does not reflect the views of Academy Mortgage, nor is intended to be legal advice.

 

  Copyright 2008-2011 by Ed Gillespie | DRE #01424603 | NMLS #244226 | All Rights Reserved

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