Monday, January 11, 2010

cash needed to do you estimate using the new Good Faith Estimate?

Well, the good news is that you, the consumer, will get a more reliable disclosure of costs from all the lenders you shop - PLUS the disclosure will be on a uniform piece of paper.  That's great news for consumers.

There's one little tip you really need to think about and that's CASH TO CLOSE.

First, because lenders are on the hook for the estimates you can be assured the estimates will be a bit higher than they used to be.  Is that bad?  Not in my mind.  I'd far rather you prepare for a higher number and have some cash left over for all those unexpected costs that all homeowners face.

Will that make homebuying less affordable for some?  Yes, BUT the some who can't show enough money maybe aren't really ready to buy.  Afterall, we're trying to recapture responsible homeownership, not cliffhanger overbuying hoping to get bailed out by a market boom, eh?

Now, the other thing you need to know is that the Good Faith Estimate form does NOT have a place that discloses CASH TO CLOSE.  So, that means you should ask your mortgage lender for a summary which includes the total costs as disclosed on the GFE and your down payment less other credits like a seller assist and mortgage.

Most lenders have not yet created this kind of document.  They are using the "Details of Purchase" section of the mortgage application also known as the 1003 form.  You'll find this on page three.

Real estate agents on the other hand might want to SEE your CASH TO CLOSE figure but if the only place it appears is on the 1003 form, then you'd be sharing your personal data with your agent.  For this reason, I highly recommend that lenders create a separate CASH TO CLOSE summary.  Keep it simple but make it easy to find and a form that the consumer can feel comfortable reviewing with a relative, friend or real estate agent.

No comments: