Mortgage 101

A GFE is a Good Faith Estimate. It is a form that estimates what charges and loan terms you can expect if you are approved for that specific loan.

Lenders are required by law to give you a GFE within three businesses days of receiving your loan application. (The GFE must be mailed or hand delivered by the end of the third business day.)

Some of the fees outlined on a GFE are covered by the buyer and some are covered by the seller.

As the name would suggest, the numbers are an estimate. They can fluctuate up to 10 percent in either direction. Because of this potential increase, it’s important you hold on to your GFE. This will allow you to compare the estimated fees against the actual fees.

What Fees Should You Expect on a GFE?

Application Fee: Your application fee is the processing charge you pay when you submit your loan. In some cases this fee is rolled into other fees.

Appraisal Fee: To ensure the home you are purchasing is worth the value of the loan, an independent third party is hired to appraise the home’s value. It is important to note this is not the same as a home inspection.

Credit Report Fee: Some, but not all, lenders will charge you to check your credit history from one or all of the three major national credit bureaus: Equifax, Experian and TransUnion.

Discount and Origination Points: In some cases, discount points can be purchased to lower the interest rate on your loan.

Escrow Account: While your escrow account isn’t a fee, it is an account which holds potential payments such as earnest money, homeowner’s insurance, private mortgage insurance, and property taxes.

Attorney Fees: Legal documents must be prepared and reviewed by a lawyer for your loan to close. In some cases the seller will pay for the attorney’s time. In other cases the buyer will be responsible for covering this fee.

Survey Fee: In order to officially define the property’s boundaries, the property must be surveyed.

How Accurate Are GFE’s typically?

Third-party fees have a tendency to fluctuate because the lender isn’t in control of these. However, the lender’s fees are typically more accurate because they have a better grasp of their own overhead.

Have additional questions about GFEs? Contact me today and I’d be happy to help you out.

Homebuilders estimate the next six months will bring the highest level of sales they’ve experienced in the last 10 years.

Just last month, U.S. Today reported homebuilders estimate the next six months will bring the highest level of sales they’ve experienced in the last 10 years.

Nationwide, the brutal winter caused nearly all construction sites to shut down and buyers to stay home. However, the sell-tides changed as Mother Nature brought a warm summer. Demand for new homes has skyrocketed, resulting in robust confidence among builders.

Additionally, the previous slowdown in production has lead to a limited supply of available homes for sale. This is effectively driving up prices. “Over the last 12 months, the median sale price for new homes has risen by 8.3 percent to $297,300,” reported Alex Veiga in his article, ‘Homebuilders’ confidence in sales surges in June’.

A drop in unemployment is also attributed to the new home buying surge. “Employers have added more than 3 million jobs as the unemployment rate has steadily dropped to 5.4 percent,” reported Veiga.

While new homes only represent a fraction of the housing market, their scarcity reflects the lack of current homes available for sale. In addition, their production has a huge impact on the economy. If you’re looking to buy new, shopping sooner rather than later might be your best option.

Read Veiga’s full article here.

Considerations

There are some big differences when your looking at buying a new home or a current home that need to be taken into account. In most cases, buying new comes with a bigger price tag. Additionally, if you’re looking for any special touches – such as certain appliances, custom cabinetry or a special floor plan – be ready to pay more.

However, the larger upfront cost can often mean savings down the line. With a new home, it typically takes you longer to incur the hefty maintenance costs associated with older homes. For those who aren’t very handy, this might prove to be a very attractive option.