November 21, 2012 5:30 am
1. Low interest rates - At the beginning of the year, home sales were still slow, so the Federal Reserve took steps to encourage lenders to reduce interest rates for home mortgages. As a result, mortgage rates have hit new record lows all year long, and it looks like we're going to end the year with average rates on 30-year mortgages well below 4 percent. If you were among those who purchased a home in 2012 or refinanced your mortgage, be thankful for the mortgage rate you received. Although the Federal Reserve is still taking steps to keep interest rates low, including purchasing $40 billion a month in mortgage-backed securities, economists fear the potential "fiscal cliff" that is looming in early 2013 will raise rates.
2. Your Good Faith Estimate - A Good Faith Estimate, or GFE, must be provided by a mortgage lender to a customer, as required by the Real Estate Settlement Procedures Act. A GFE is basically a list of all associated costs you have to pay to purchase the home. This includes closing costs, inspections, title insurance, taxes and other charges. It must be provided to the prospective borrower by the lender in three business days after the customer applied for a loan. It's basically a standard form that allows the borrower to compare and contrast quotes from various lenders. By law, the lender cannot change the fees listed in the origination box once the form has been issued to the prospective borrower. Although GFEs are not new, they have gotten a lot more detailed in recent years, meaning they are something you should be thankful for if you purchased a home in 2012. What other industry is required to give you a price quote before you sign paperwork? And, even if they do, is it required by law like it is with the mortgage industry? Be thankful you had GFEs to compare before you had to decide which quote was right for you.
3. More competition - Ever since the housing market collapsed in 2007, lenders have been more apprehensive to approve home loans. However, if you have a great credit score, mortgage lenders have been fighting for your business all year long! They still want to approve loans, but only to those individuals who they think will pay back their debt, instead of people who will get behind on payments, forcing a foreclosure or short sale. If you have good credit and went house shopping in 2012, you were likely surprised at how accommodating lenders were when you applied for a loan. The better your score, the more competition there was for your business, so that's always something to be appreciative of. With more and more Americans having to file for bankruptcy or struggling to make ends meet, consumers with good credit scores are hard to come by these days, and lenders know that.
Published with permission from RISMedia.