At least that’s how some mortgage borrowers feel about the Good Faith Estimate.
According to a recent survey from ING Direct, the document that has been designed–and redesigned several times–to help homebuyers estimate the costs associated with their mortgage, apparently isn’t accomplishing what it set out to do. Fifty six percent of those surveyed admitted that they didn’t use the document for its original purpose: to compare mortgage offers.
When you’re saving to buy a home, it’s easy to focus all your attention on a home’s price and the loan’s interest rate. However, you can’t forget to factor in closing costs when determining your level of affordability.
What are closing costs?
When mortgage rates dropped below 5.5 percent, just about everyone who could refinance hopped on the bandwagon. But rates continued to drop, shattering record after record, and homeowners who refinanced just months ago are considering doing it again.
Is serial refinancing just silly?
A recent report suggest that closing costs have risen substantially over the last year:
A new survey by Bankrate.com showed a startling 37 percent jump in estimated closing costs. The survey compared certain costs reported on the good-faith estimate lenders must give borrowers shortly after they apply for a loan.
[The survey concluded that] The average cost nationwide this year was $3,741, compared with $2,739 last year.
Today’s housing market is a buyer’s market. Falling home prices, historically-low interest rates, foreclosed properties, and financial incentives have all lured potential homebuyers to the forefront in search of a once-in-a-lifetime deal.
Sellers, on the other hand, have gotten the short end of the stick. Falling home prices and dirt-cheap foreclosures have taken the profits right out from under them.
Federal interaction and incentives combined with the dismal conditions of the housing market have concocted the “perfect storm” for eager first-time homebuyers shopping for a great deal. Mortgage rates are at historic lows, first-time buyers can take advantage of an $8,000 tax credit, home prices are tumbling, and home owners are eager to sell. Could the time be any more right?
Before you jump in with both feet, here are a few important factors to first consider: Read the rest of this entry »
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