Buy a House Fast

If you’re like most soon-to-be new homeowners, just waiting for your house to close, it’s not uncommon to feel preoccupied with projects you can do and things you need to buy to make your DC area home just right. Sometimes it’s just the carpeting that’s too good to wager the seller into a replacement, but it’s ugly or doesn’t match your furniture.  Or maybe you simply have no intention of moving your hand-me-down kitchen table or refrigerator into your new home.  Your inclination is to hit Sears, Lowe’s, or Bonzo’s Carpet and Tile so you can get your hands on all the state-of-the-art gadgets and appliances to match the standards of the new move-in. That’s how it should be, right?

You might be tempted to just pull out your credit card and charge the purchase, or perhaps push it onto a new account.  The plan is to have the installers on their way as soon as you have the keys.  Perfect, right?

Or maybe you need a new car.  You have budgeted for it, but wanted to have your mortgage loan approved before you made the deal.  Good strategy, correct?

Wrong, wrong, wrong! Fannie Mae’s new rules go into effect June 1 (though lenders have the discretion to put them into play at once) that require lenders to pay more attention to changes in your credit report from the day you applied until the day you close.  They must refresh your report to see if your credit balances have changed or if you have acquired a new debt.  They must even check out credit inquiries to see if you succumbed to that persuasive furniture salesman and are obligated to pay back a ‘new’ loan.  Lenders now have access to new fraud detection tools that can determine if you are trying to work around the system or if you have undisclosed debt.

For some borrowers, a bit of additional debt might not make much of a difference, but for most people, it could delay closing. Worst case?  The bank decides against approving the loan, altogether.

If you are buying a home, be forewarned and plan accordingly.  Pay cash for what you need!  If you want to preserve your cash until after closing, wait until then to buy.  If you really can afford the new purchases or the new car payment, or want to take advantage of a 30-60-90 deal or deferred billing, wait till you have the keys in hand.  Don’t even let the store run your credit to see if you qualify.  If you need carpeting installed or want some other project completed before you move in, plan a little slack in your moving schedule.

As exciting as the offers around may seem, you might want to gauge and rethink giving your new refrigerator a home, before you’ve closed on yours!!

Looking for the perfect affordable home in the DC area, including Maryland or Virginia?  Express Realty Services has a great selection of homes to fit your budget.  We can even show you our latest remodeled and renovated homes from our sister company, Express Homebuyers!  Call today or visit the Express Realty Services website.

Transparency is the name of the game in lending today. This is a good thing, since people want to know what they are paying for.  Closing on a house purchase includes many fees that impact how much money a borrower needs to fork over to the bank when the house closes.

Effective January 1, 2010, lenders have to lay out the costs for potential borrowers in a new Good Faith Estimate (GFE) form. Ironically, this form does not answer the bottom-line question of the amount you need at closing or your monthly mortgage payment. However, it does indicate which costs are guaranteed to stay the same and which might change.

The GFE concept is not new, but the form and the way the costs appear have been rearranged.  In the past, a customer could shop for a loan before he settled on a lender and obtain a written GFE, but still be clueless as to the real coast of the loan.  The best loan is not the necessarily the one with the lowest interest rate, as there are numerous other fees involved in obtaining the loan.

How lenders divvy up the fees to process a loan differ; the new form does not list each specific component. The new form may seem to offer less transparency as all the fees are lumped together, but they emphasize the total costs for loan origination, which is really the important thing.

The strategy is similar to that used by some grocery stores which stress total costs rather than the cost of one item. One week, Giant Eagle may have skinless, boneless chicken for $1.79 a pound, which attracts some shoppers.  The advertising folks at Giant Eagle hope you will do all your shopping there when you come for the chicken.  A shopper who patronizes another store could pay a little more for their weekly chicken fix, but still come out of the store paying a few dollars less for the same selection of items for a given week.  Some shoppers might pick up the bargains at Giant Eagle or Acme and do the rest of their shopping elsewhere, but for the majority of shoppers who use one store, the total bill for the cheap chicken and the rest of the items in their shopping cart could actually be more than from another store where prices were lower overall.

The new rules direct the borrower’s eyes toward the total cost of loan origination but not the total cost to finalize the transaction. Some costs outside section one of the form may change – including the interest rate. This is why the completed form does not offer the amount due at closing or the monthly payment.

In reality, you could collect GFE’s for several banks, perhaps even before you finalized the deal for your home and before the house was appraised or the title process was done.  These services, as well as the cost of insurance, can vary.  The bank can only provide you the costs it has a handle on; anything further would only be ballpark guess.

The government has mandated using the new form starting in 2010.  The question remains: Will this form really give consumers a better idea of the cost of credit?

Express Realty Services has no crystal ball to predict what you will pay each month or at closing, but we will do our best to keep you informed of all the costs so you are not surprised at closing.  When you buy an affordable DC, MS, or VA home from us, we will be with you every step of the way until those keys are in your hand and beyond.  If you want a Realtor® with staying power, call us today!