The Columbia SC mortgage industry now has new regulations in effect designed for lenders to be more transparent in their dealings with borrowers. The areas of reform are aimed at simplifying and streamlining some of the consumer disclosure documents in order to make it easier for borrowers to understand various lending programs.

Columbia SC Mortgage Rules Change: Know Before You Owe

As a result of the last housing and mortgage crisis and the passage of the Dodd-Frank legislation, the Consumer Financial Protection Bureau (CFPB) was established to design simplified forms to address two key areas: post application disclosures and pre-closing information. The CFPB reportedly spent nearly four years researching and testing the new disclosures and are now ready to require Columbia SC mortgage lenders to implement them.

For their part, mortgage lenders nationwide say the reform has created a huge technological challenge involving additional software programs and thousands on man hours in training and ramping up for the new disclosure procedures.

The disclosure form that is given to the consumer after the loan application begins — known as the Loan Estimate — covers the rules regarding what can and cannot be done by the lender, including cost estimates that must be approved by the borrower in writing before the loan application process can continue. The Closing Disclosure must be given to the borrower within three business days of closing. It captures all the costs paid by the consumer. If the borrower wants to make any changes during the three-day window, the three-day period resets. This, inevitably, will cause delays and potential "domino effects" that could create additional delays in closing.

Columbia SC mortgage lenders are keeping their collective fingers crossed that the new disclosure requirements will be seamless. However, there are numerous “moving parts,” as the disclosures now impact the real estate industry. While real estate professionals have no direct responsibilities under the new regulations they still have a role in the process. They need to educate their clients about the changes and help them understand that the loan closing transaction may take longer. Additionally, real estate clients will need to understand that there is an increased risk of delays in the loan closing — especially if borrowers try to make “eleventh hour” negotiations or changes within the three-day waiting period.

Once upon a time in the Columbia SC mortgage market, "adjustable rate mortgages" (ARMs) was a phrase that was shunned. During the Great Recession of just a few short years ago, many consumers experienced their mortgage payments spike to levels of unaffordability. Sadly, some of those homeowners fell victim to foreclosure. But what about now?

The Columbia SC Mortgage Arena: Are ARMs Making a Comeback?

Some mortgage industry experts say that adjustable rate mortgages are returning to popularity among some borrowers who consider them as a potential way to save money and more easily qualify for a mortgage loan. The Wall Street Journal recently reported that in 2013 roughly 22% of all mortgage amounts between $417,000 and $1 million were ARMs. In 2014 the percentage increased to 31% and appears to be climbing.

In the Columbia SC mortgage landscape it appears that most borrowers interested in adjustable rate mortgages plan to be in their home for a relatively short time period. And, if their employers transfer employees every few years, for example, an ARM may be a better fit than a traditional fixed rate mortgage. Consider this: a 30-year fixed rate mortgage may be higher than a five year ARM at a lower rate, saving the homeowner a considerable amount of money during those five years.

In addition, Columbia SC mortgage lenders have improved their ARM products through "hybrid" loans that can offer important features to some borrowers. Not only can borrowers save money during the first five years until their first rate adjustment, if there is one, but the adjustments are limited to how much the rate can increase.

For borrowers that have the financial wherewithal to take necessary action if their rate rises, ARMs may be a preference. However, some Columbia SC mortgage lenders caution average homeowners and recommend against getting "backed into a corner" with an ARM in which they have no control over a rise in interest rates. They also warn that the simple answer of refinancing if the rate increases is somewhat risky. Conventional rates may have also risen by that time and, of course, there are always closing costs associated with refinances.

So, ARMs may be worth a second look depending on your particular employment situation and risk tolerance. As usual, there's not a "one size fits all" Columbia SC mortgage.

Get more Columbia SC mortgage tips and informatiion by checking our other articles in the Columbia SC Mortgage Info section to your right under Columbia SC Real Estate Categores.

In a move to assist Columbia SC mortgage borrowers, the Federal National Mortgage Association (Fannie Mae) announced it will make substantial changes in a lending program for low-to-moderate-income households. The program, dubbed HomeReady, is scheduled to begin in December. It promises to feature new lending guidelines recognizing that many of Columbia SC mortgage customers share homes and the accompanying financial responsibilities with their extended family. This is especially true in Hispanic and African American households.

New Rules in the Columbia SC Mortgage Game

Under the new guidelines, Columbia SC mortgage lenders will be required to include income from non-borrowers living in the same household as the primary borrower. Fannie Mae officials say this income has been proven to the stable over time and contributes greatly to the household and, therefore, the monthly mortgage payments.

Columbia SC mortgage borrowers may also be allowed to count income from co-borrowers that are not occupants, such as parents or in-laws. As is the case with a number of other mortgage products, the down payment can be as low as 3%. And, closing fees and PMI will also be less than on other loans.

Fannie Mae expects the new program to assist homeowners who suffered losses when home values dropped during the most recent housing crisis. In addition, the new guidelines are designed to assist first-time buyers entering the home market. The new program carries no set income requirements for Columbia SC mortgage borrowers buying in federally identified low-income census tracts. To qualify, homebuyers in those census tracts cannot earn more than the area’s median income. Income for homebuyers in other census areas cannot exceed 80% of that area’s median income.

The program requires borrowers to enroll and finish an online educational course on homeownership. In addition, borrowers will receive information on counselors in their area specializing in housing advice in the event they have financial trouble in the future.

It remains to be seen how many Columbia SC mortgage lenders will offer the HomeReady program. Industry experts say the new program could spur some renters into becoming homeowners. Recent statistics released from zillow.com show that on average a renter spends slightly more than 30% of monthly income on rent. The average homeowner spends half that number, 15.1% on a mortgage payment.

While it’s not clear how many lenders will offer the program, HomeReady could offer an opportunity for some households burdened by high rents to get into homeownership. A recent report from Zillow found that the average renter now spends 30.2 percent of his or her monthly income on rent, compared with an average of 15.1 percent for homeowners with a mortgage. In high-cost metro areas, the rental burden rises to as high as 40 percent.

Find more articles about the Columbia SC mortgage market by checking out our Columbia SC Mortgage Info to your right just below our Columbia SC Real Estate Categories.

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In addition to other favorable signs, the Columbia SC mortgage market is expected to be one of the positive features in the recovery of the housing market. Experts say Home Mortgage Disclosure Act (HMDA) information indicates the housing improvement continues.

Continued Improvement in Columbia SC Mortgage Market Expected

Because of the data trends, lending projections are expected to rise. And that could be even better for the real estate economy as it may stem any expected interest rate hikes by the Federal Reserve for awhile.

Mortgage lending dropped 27% last year to slightly over $1.25 trillion, but many economists had projected decreases of 40% compared to the previous year. The improvement was fueled in part by a larger percentage of purchases versus refinances at 51% compared to 49%. The trend has continued into this year, as well.

Refinances have increased to higher than expected levels as lower interest rates have held steady. Columbia SC mortgage market insiders say the refinancing spike is also due to the Federal Reserve’s recent hints at what was originally expected to be a slight increase in the federal funds rate.

The Mortgage Bankers Association has also improved its earlier forecast regarding loan originations, expecting them to rise 23%, citing a 25% spike in home purchases totaling more than $800 billion.

The resulting economy has given mortgage lenders a renewed optimism. A combination of lower down payment requirements that appeal to first-time homebuyers, and low interest rates for those seeking to refinance are reasons for the improvement in the Columbia SC mortgage market.

The HMDA information is compiled from reports from more than 7,000 lending institutions throughout the country. The data is utilized by state and federal compliance officials and bank regulators to — among other things — ensure that lenders make mortgages available to people living in minority neighborhoods.

Because the mortgage market can be volatile, economists and industry experts have historically projected conservative numbers. This is due in no small measure to interest rate fluctuations and the lag time inherent in obtaining disseminating public records data. Some lenders say that lag time can often be as long as nine months.

The improvement that’s been on the Columbia SC mortgage market horizon, however, isn't universally expected to continue. Some industry experts say stagnant wage growth and higher home prices causing the current seller's market will dissuade some buyers in premium-priced markets.

As one real estate economist put it, perhaps the real value of the HMDA data will be to reinforce the feeling that the market is sustainable and the "Chicken Little" concept of "the sky is falling" is not the current market condition.

For more articles pertaining to the Columbia SC mortgage market, check out other articles in the Columbia SC Mortgage Info section of our site below our Columbia SC Real Estate Categories in the column to your right. Remember, we also post tips daily on Twitter and Facebook. Check us out there too.

Whether it's a topic like the Columbia SC mortgage industry or another subject, we live in an information-rich environment. The Internet, 24-hour cable news stations and a burgeoning social media network keeps Americans in touch with available information almost instantly. Yet the endless wealth of information at our disposal also means there's a glut of misinformation being disseminated as well. Much of that half-correct, or in many cases, blatantly incorrect information concerns the housing market and the mortgage industry. Let’s look at a few commonly-held Columbia SC mortgage misconceptions.

Columbia SC Mortgage Myths Dispelled

Myth #1: You Have to Have Perfect Credit.

In a recent survey, nearly 67% of participants thought their credit had to be very good — nearly perfect — in order to qualify for a mortgage. The truth is there are loan programs available for borrowers with less than perfect credit scores. While it's true that a higher credit score helps in getting a preferred interest rate, even if you have a few credit bruises and blemishes you can still qualify for a home mortgage. Experts say there are other factors that lenders consider like employment stability, income and debt ratios. Remember, every loan situation is different.

Myth #2: You Have to Have a 20% Down Payment.

This is another popular misconception in the Columbia SC mortgage market. For decades lenders have made home loans to borrowers with considerably less than a 20% down payment. Borrowers can avoid the required private mortgage insurance (PMI) if they have a down payment of 20% or more, but many Columbia SC mortgage lenders have loan programs designed for purchasers with little or no down payment. Industry experts continue to encourage homeowners to think of their houses as a home meeting a certain set of needs at a particular point in time — not as a financial investment with a guaranteed return or appreciation.

Myth #3: A Home is a Great Investment.

Owning real estate can be a sound investment over time. However, there are no guarantees. Many variables must be considered that may affect your home as an investment. In addition to the continued appeal of the neighborhood in which your property is located, other factors may impact your home's value: the home's age, its condition, and market supply and demand.

Myth #4: You Own Your House When You Close the Sale.

The term "homeowner" is used loosely to describe those who have bought homes. However, the simple truth is — unless you paid cash or traded for some other consideration — the majority of homeowners are "still buying" their homes. Because a Columbia SC mortgage institution loaned you the money to purchase your home, you don't really own it until the mortgage is repaid. The old joke about "the bank owns it" isn't just a joke… it's true.

Myth #5: Home Ownership is the American Dream.

While aspiring to own a home is an important goal to many, it’s not everybody's cup of tea. A great number of people in the United States will probably never be able to buy a home — and many simply prefer not to own. Some survey respondents cite upkeep or maintenance issues, resale concerns, problems with job relocation and other reasons they are content to rent instead of own. The "American Dream" can turn into a veritable nightmare in a recessionary economy or crumbling job market. Sadly, millions of home owners who experienced foreclosures during the most recent housing crash would agree.

See more articles pertaining to the Columbia SC mortgage market in the Columbia SC Mortgage Info section, of our site below Columbia SC Real Estate Categories in the column to your right. Remember, we also post tips daily on Twitter and Facebook. Check us out there, too.