Mortgage closing costs are on the rise across the nation and are up 8.8% over the last twelve months. Origination and title fees on a $200,000 home loan average $4,070 nationally according to Bankrate Inc.’s 2011 Closing Costs Survey.
Banks are requiring extra employment verification and the like to keep loans in shape for Fannie Mae and Freddie Mac, and although these regulations “have been in place for a couple of years already, the mortgage industry takes them more seriously now. New forms and regulations that are still in discussion are influencing lenders already.”
Bankrate said, “On average, lenders charge about $1,614 in origination fees this year, up 10.3 percent from last year. Origination fees include lender charges for services, such as underwriting and processing.”
“Interest rates get a lot of attention, and rightfully so, but it’s also important for consumers to compare lender fees when shopping for a loan,” said Greg McBride, CFA, senior financial analyst for Bankrate Inc.
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Should you keep paying your mortgage on a home that’s dwindling in value? No way, say an increasing number of underwater homeowners who are voluntarily choosing to “walk away” from their home loans, a practice known as “strategic default.”
Jon Maddux, CEO of YouWalkAway.com, reports 10% more clients this year to his company, which advises people how best to handle the walk away process.
Charles Gallagher, a real estate attorney in St. Petersburg, Fla., has also seen an uptick.
And a recent survey by home finance company Fannie Mae found that while only about 27% of homeowners would even consider walking away, that’s up from 15% last year.
In an early 2010 report, Morgan Stanley researchers said nearly 200,000 defaults in the prior year were voluntary, or roughly 12% of the total. The bank expects to issue updated estimates in coming weeks.
“People are more educated about the process,” said Maddux of YouWalkAway. “They’re making more calculated, less emotional, decisions and are less fearful and less concerned about the stigma.”
University of Arizona law professor Brent White thinks the past few years of banking scandals have reinforced the view that it’s not unethical to walk away.
“There’s a sense that the banks don’t follow the ‘rules,’ but somehow the little guy is supposed to — more and more people are saying ‘enough is enough’ and walking away,” said White, who is also the author of “Underwater Home: What Should You Do If You Owe More on Your Home than It’s Worth?”
Some homeowners, however, can’t get past the stigma.
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