In our Columbia SC Real Estate News for September 2015 we look at "Columbia SC Mortgage Rates after the Stock Selloffs" last week, "Changes That May Affect Those Closing on a Columbia SC Home This Fall", and we say goodbye to this Newsletter Category at our Blog:
Columbia SC Mortgage Rates Fall After Stock Selloff
Columbia SC Mortgage rates fell last week after market turmoil sent the yield on a 10-year Treasury briefly below 2 percent.
Freddie Mac says a 30-year fixed-rate Columbia SC mortgage averaged 3.84 percent tin the week ending August 27, down from 3.93 percent the previous week, and the lowest since May. A year ago, 30-year rates averaged 4.1 percent.
This is the fifth straight week that 30-year rates have stayed below 4 percent. A 15-year fix averaged 3.06 percent, down from 3.15 percent last week. A one-year adjustable rate mortgage averaged 2.62 percent, unchanged from last week.
"Events in China generated eye-catching volatility in equity markets worldwide over the past week," according to Freddie Mac chief economist Sean Becketti. "Interest rates rocked up and down — although to a lesser extend than equities — as investors alternated between flights to quality and bargain hunting among beaten-down stocks."
Freddie Mac expects 30-year Columbia SC mortgage rates to remain subdued in the short-to-medium term.
A separate report last week showed home sales continue to gain. The National Association of Realtors says pending sales of existing homes in July were up 7.4 percent from a year ago, to the third highest level this year.
Let's look at what this means, along with what a change in RESPA procedures may mean for anyone buying a Columbia SC home this fall…
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Buying a Columbia SC Home? Changes Are Coming
If you're buying a Columbia SC home this fall, get ready for a change in the TILA/RESPA Integrated Disclosure rule, which includes the acronym that may end all acronyms: Truth in Lending Act/Real Estate Settlement Procedures Act. (You may also see the acronym TRID refer to this as well.)
What the heck are we talking about?
The changes to the process of getting a Columbia SC mortgage are significant, especially for those real estate professionals who have been working in the residential side of the business for quite some time.
The first major change is in the paperwork. The existing Truth-In-Lending statement is getting merged (somewhat) with the existing HUD-1 settlement statement.
What does this mean for most home buyers?
Closing agents, title companies and closing attorneys will now deliver a “Closing Disclosure” to the borrower. The Closing Disclosure is a five-page form that combines many aspects of the Truth-in-Lending form and the old HUD-1 settlement statement (also affectionately known as the RESPA statement).
In addition to the Closing Disclosure that is given to the borrower and not to the seller, the buyer and seller will sign a Settlement Statement. This new settlement statement has a very different look than the old HUD-1 settlement statement. Since most buyers and sellers found the old HUD-1 form to be fairly incomprehensible, you’d hope that a redesign would make it more clear where the cash is coming from and going to in the closing.
Unfortunately, it doesn't appear that the new form will strike most buyers and sellers as much of an improvement. The key to clarity in the closing of real estate transactions is the person working with the buyer/borrower at the closing. And that brings us to the next new issue coming down the line.
The government has always had a rule that requires lenders to give you the closing cost disclosure in the form of the HUD-1 one day before closing. But frequently, the HUD-1 has been given to borrowers on the actual day of the closing or late on the day before closing. The borrower then has little time to review the closing statement and understand it before going to closing on their new home.
The government is trying to fix the timing issue, hence, the new timing requirement that will come on October 1.
The new rules will require lenders to give a borrower three days to review the Closing Disclosure, and that must be at least three days before closing. In other words, about seven days before closing, a lender must send the disclosure to the borrower. The borrower would then have three days to sit and review the disclosure and the closing could occur three days after the end of that first three-day period.
There is a bit of confusion in the industry relating to the impact the change will have on the timing requirements, on the calculation of certain fees (in particular owner’s and lender’s title insurance policies) and whether other last minute changes to the Closing Disclosure would require a new three-day disclosure period and push closings out at the last minute. This will play out in real time during hundreds, or even thousands of closings set for the end of September and into the beginning of October — and that’s what’s making everyone in the real estate business so nervous.
We’ll all be watching to see what the regulators come up with for Oct. 1.
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Our Final (Official) Columbia SC Real Estate Newsletter
This will be the final issue of our "Columbia SC Real Estate Newsletter." We keep this website completely updated every couple of days throughout each and every month, and therefore, retiring what is categorized as a "Newsletter" doesn't really mean much, other than the fact that we'll continue to bring you the most up to date news we possibly can, only itemized more in our other categories to your right.
We made the decision to dissolve the "Columbia SC Real Estate Newsletters" category in lieu of making the information we include in the newsletters easier for you to find in the specific categories for which they have covered in the past.
For example, instead of being buried in a library of past newsletters, articles we included in this issue will now be expanded on further and listed in the category for which it most applies. This month, the two articles above would fall under the Columbia SC Mortgage Info and Columbia SC Real Estate categories to your right, so it will make our news easier for you to find and look back on.
We hope you will continue to enjoy the information we provide for you here at our website/blog, and find that by us breaking these stories down and into the categories they would fall under, it will make finding the information you want much easier.
The Home Affordable Refinance Program, or HARP, was instituted in March, 2009 and became a moderately successful tool for homeowners in the Columbia SC mortgage market as well as other markets all across the United States.
Help for Columbia SC Mortgage Borrowers
Because of fairly conservative loan-to-value restrictions, HARP was improved to HARP 2.0 in 2011 with LTV ratios higher than 125%.
HARP's primary existence is for homeowners who are underwater — that is, where the mortgage balance exceeds the free-market value of the home — to refinance their loans and save money over the long haul. Until recently, the program was not often utilized for investment properties. In a newly announced Federal Housing Finance Agency (FHFA) report, roughly 11% of HARP 2.0 loans were used to refinance investment properties. By refinancing, real estate investors could potentially reduce their monthly Columbia SC mortgage payments by two full percentage points. This would equate to a savings of several hundred dollars a month — and thousands over the life of the loan.
HARP Guidelines
Interestingly, HARP guidelines make no distinction between owner occupied properties and investment rental properties. The mortgage must be owned by Freddie Mac or Fannie Mae. All a borrower needs to do is check with a lender to find out its status. Alternatively, this information is also available online. Other requirements include a mortgage balance that is greater than 80% of the value of the property; the borrower cannot have been more than 30 days past due in the last six months. In addition, the borrower can not have already used a HARP refinance on the property.
HARP Benefits
The benefits of a HARP refinance are many, for both investment properties and primary residences. Regardless of whether you owe more than 80% LTV on your mortgage, a HARP refinance doesn't require private mortgage insurance (PMI.) Plus, there are no closing costs that need to be paid up front. Borrowers can include them in the loan amount. Couple those savings with the interest rate savings and an investor can save thousands of dollars that can be pocketed or reinvested in the purchase of additional rental properties.
To date, the HARP program has produced savings for more than 400,000 investors. If interest rates remain fairly low there's plenty of reason to think that total will continue to rise.
So if you're a savvy investor, it's probably a good idea to look into whether you are eligible for a Columbia SC mortgage refinance using HARP 2.0. After all, saving money on your rental property, increasing cash flow and freeing up money for other potential investments are probably reasons you bought investment property in the first place!
Many lenders offer HARP loans for rental properties, so shop around. Remember, if your application is denied by one lender it doesn't mean it will necessarily be rejected by another. Most Columbia SC mortgage lenders will require copies of your income tax returns for the past two years, a copy of your lease agreement on the rental property, proof of the rental income, proof of your normal income, and verification of other assets in the event your rental income ends or is interrupted.
You can get more information about news that may affect the Columbia SC mortgage market in our section on Columbia SC Mortgage Info to your right under Columbia SC Real Estate Categories.
We also offer tips on a daily basis on Twitter and our Facebook Page, some of which may deal with Columbia SC mortgage info. Check us out there as well.
One of the most important components to obtaining a good Columbia SC mortgage is the down payment. Unfortunately, many homebuyers have misconceptions about down payments and how they impact their ability to obtain home financing. Let’s examine some of the down payment myths that are prevalent in the Columbia SC mortgage arena.
4 Columbia SC Mortgage Untruths
1. You have to have a 20% down payment.
While it’s true in days gone by a 20% down payment was required for a conventional mortgage, such is not the case today. Homebuyers have a much larger array of mortgage options available that don't require such a hefty down payment percentage.
In a recently-published Consumer Protection Financial Bureau finding, approximately 50% of prospective home purchasers fail to explore all their options when shopping for a mortgage. From conventional loan offerings with a lower down payment to Fannie Mae, Freddie Mac and other products with down payments ranging from 0% to 3.5%, buyers can find Columbia SC mortgage loans that meet their needs, and their pocketbooks.
2. Making a large down payment is always best.
While some Columbia SC mortgage lenders suggest a down payment of at least 20%, sometimes it may not be the best thing to do. A smart homebuyer should weigh all the factors and expenses involved in a real estate purchase. Don't forget big-ticket items such as loan closing costs, moving expenses, repairs or cosmetic improvements, or additional furnishings. Even though a larger down payment will make your monthly payments smaller, it could deplete your financial reserves. Consider finding the proverbial "happy medium." Put down what you feel comfortable with. Don't empty your savings — even if it means a slightly larger monthly payment. You'll sleep better.
3. Sellers won't accept offers with a gift or homeownership program for the down payment.
Home sellers often operate under the misconception that cash is king — and for good reason. However, today's buyers equipped with a homeownership program, a gift or a grant can more readily compete on a level playing field with other prospects when it comes to the seller's asking price and costs sellers may pay. The advantage, therefore, to the seller is that he stands more to gain by broadening his pool of potential purchasers.
4. Financing a home with a down payment programs is difficult.
Let's face it, in today's Columbia SC mortgage market, paperwork and processing time is just the nature of the beast. The simple truth is that the qualification process for a homebuyer down payment program isn't much different than the required process of any mortgage loan. Down payment programs are often available through local or state housing finance entities, who in turn approve certain qualified mortgage lenders. Getting an early start with the process will ensure a smoother transaction.
Knowing the "ins and outs" of down payment requirements will better equip a prospective home purchaser and make searching for a home — and the best Columbia SC mortgage loan — more enjoyable and more affordable.
We also post tips on Facebook and Twitter. Follow us there for a lot of Columbia SC mortgage related information as well.
Congratulations! After a few weeks of gathering documents and waiting for your mortgage loan to be processed you’ve finally been approved! Soon it will be time for the loan closing, the culmination of the process. Now it’s time to think about Columbia SC loan closing costs and, more importantly, minimizing them and keeping more money in your pocket. After all, you’re getting ready to make the down payment and now you have to come up with even more money to close the deal?
Ways to Reduce Your Columbia SC Loan Closing Costs
Exactly What Are The Columbia SC Loan Closing Costs Anyway?
At the loan closing, most borrowers are required to pay a certain amount of money to cover these and potentially other items required by your lender:
Real estate taxes and homeowners insurance paid into an escrow account
Interest points purchased to bring down your interest rate
Title transfer fees or title insurance premiums
Appraisal costs and survey fees
Homeowners association dues
Why Do These Amounts Vary From What Was Estimated?
Remember when you applied for your mortgage? You probably received a Good Faith Estimate of what the Columbia SC loan closing costs would be based on typical mortgage transactions. The key word here is “estimate.” There is only a slight variation, if any, from what the lender may change you in the way of origination fees, processing fees, etc, However, the third-party fees like appraisals, surveys and home inspections may vary.
In addition, if you’re refinancing, it’s possible that the property may appraise lower than anticipated, causing your loan-to-value ratio to be higher than expected. Your lender may require that you pay more in prepaid interest points at the loan closing to secure a specific interest rate.
How Can You Keep Closing Costs Down?
So what are your alternatives if your Columbia SC loan closing costs are simply more than you can afford? Consider these options.
Many times purchasers are able to negotiate with the seller or his agent that some or even all of the closing costs will be paid by the seller. A motivated seller may be open to such a proposition as a necessity to sell his property. Usually what happens is the seller agrees to certain concessions — to pay certain closing costs — in exchange for the purchaser paying a slightly higher price for the property. This allows the buyer to “finance” the closing costs into the total mortgage amount and amortize it over the loan’s term rather than having to have the extra money at the loan closing.
Find more articles pertaining to saving money on your Columbia SC mortgage under our Columbia SC Mortgage Info to your right just below our Columbia SC Real Estate Categories.
We also post tips on Facebook and Twitter. Follow us there for many other Columbia SC mortgage related tips as well.
When it comes to the Columbia SC mortgage market, these days the choices can be a little confusing. Mortgages typically fall into one of three categories: fixed rate, adjustable rate (or ARM) or hybrids (a combination of features of both fixed rate and adjustable rate offerings.)
No matter which type you choose, it’s best to select the Columbia SC mortgage that you can afford the easiest, pay off the quickest and repay as little interest as possible over the life of the loan.
A fixed rate loan offers a set rate that won’t change during the term of the mortgage. If you qualify for a payment based on a shorter-term mortgage, you can save a substantial amount of interest — even though your monthly payments will be higher.
An ARM is a popular choice since the initial rates may be lower. However, if you choose an ARM, remember these two factors:
1) WHEN the interest rate can adjust, and
2) HOW MUCH it can adjust
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.
We also post on Facebook and Twitter. Follow us there for many other Columbia SC mortgage related tips, too.