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I specialize in Kentucky First Time Homebuyers FHA, VA, USDA & Rural Housing, KHC and Fannie Mae mortgage loans. I have helped over 900 Kentucky families buy their first home and refinance their current mortgage for a lower rate; Kentucky First time buyers $0 down still available with down payment assistance with KHC. Free Mortgage applications same day approvals. Web site is not endorsed by the FHA, VA, USDA govt agency. Text/call 502-905-3708 kentuckyloan@gmail.com NMLS 57916 NMLS ID 1364
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Showing posts with label refinance. Show all posts
Showing posts with label refinance. Show all posts
Kentucky VA Loans Cash Out Requirements on a VA refinance
Labels:
2019 VA Kentucky Loan Limits,
2019 VA Mortgage Guide in Kentucky,
cashout. VA,
Kentucky Mortgage Refinance Questions to ask,
refinance
I have helped over 1300 Kentucky families buy or refinance their home over the last 20 years. Realizing that this is one of the biggest, most important financial transactions a family makes during their lifetime, I always feel honored and respected when I am chosen to originate their personal home loan. You can count on me to deliver on what I say, and I will always give you honest, up-front personal attention you deserve during the loan process.
I have several advantages over the large banks in town. First, I can search and negotiate for your loan options through several different mortgage companies across the country to get you the best deal locally. Where most banks will offer offer you their one set of loan products. I have access to over 10 different mortgage companies to broker your loan through to get you the best pricing and loan products that may not fit into the bank's program due to credit, income, or other underwriting issues.
You will not get lost in the shuffle like most borrowers do at the mega banks; you're just not a number at our company, you are a person and we will treat you like one throughout the entire process.
How to Get Qualify for FHA Streamline Mortgage Refinance Program
How to Get Qualify for FHA Streamline Mortgage Refinance Program
Eligibility Requirements
Oddly enough, the FHA Streamline mortgage refinance program is one of the easiest to qualify for. All one has to have is a current FHA-insured mortgage loan. To refinance it, one does not need a new appraisal of his home; the FHA will count the original value of the house as its existing worth. The only homeowners who cannot qualify for this program are those whose conventional loans are owned or serviced by Sallie Mae or Freddie Mac.
The Streamline Mortgage Refinance Plan
There are official rules for participating in an FHA mortgage Streamline refinance. The first of these is that one must have an excellent payment record that goes back at least three months. Another is that all loans must be current at the time they are closed upon. Also, the FHA mandates that borrowers complete 6 mortgage payments on their FHA mortgages, and that no less than 210 days go by from the most current closing to qualify for Streamline refinance.
What Verification?
Another perk of FHA Streamline mortgage refinance is that there is no verification of … anything, really. A person should be aware of the FHA Streamline refinance mortgage rates, but that’s all he’ll need to know. The FHA does not require income verification, proof of employment, or that one provide income tax returns. It also doesn’t look at one’s credit score because it relies on payment histories to determine future loan functioning. Add to that the fact that there’s no need for an appraisal, and this is a pretty good deal.
Labels:
FHA,
FHA Streamline Refinance,
refinance,
Streamline
I have helped over 1300 Kentucky families buy or refinance their home over the last 20 years. Realizing that this is one of the biggest, most important financial transactions a family makes during their lifetime, I always feel honored and respected when I am chosen to originate their personal home loan. You can count on me to deliver on what I say, and I will always give you honest, up-front personal attention you deserve during the loan process.
I have several advantages over the large banks in town. First, I can search and negotiate for your loan options through several different mortgage companies across the country to get you the best deal locally. Where most banks will offer offer you their one set of loan products. I have access to over 10 different mortgage companies to broker your loan through to get you the best pricing and loan products that may not fit into the bank's program due to credit, income, or other underwriting issues.
You will not get lost in the shuffle like most borrowers do at the mega banks; you're just not a number at our company, you are a person and we will treat you like one throughout the entire process.
2013 Louisville Kentucky FHA Streamline Refinance Guidelines
2013 Louisville Kentucky FHA Streamline Refinance Guidelines
Louisville Kentucky FHA Streamline Refinances are FHA-to-FHA rate/term refinances designed to reduce the borrower’s principal and interest payments. FHA offers the following types of processing:
• Streamline with Appraisal
• Streamline without Appraisal
.
Mortgage Payment History
The mortgage history must be 0X30 in the last 12 months, regardless of the AUS decision.
Net Tangible Benefit
The lender must determine that there is a net tangible benefit as a result of the streamline refinance transaction,
with or without an appraisal. Net tangible benefit is defined as:
• reduction in the total
• refinancing from an adjustable rate mortgage (ARM) to a fixed rate mortgage,
mortgage payment (principal, interest, taxes and insurances, homeowners’
association fees, ground rents, special assessments and all subordinate liens),
OR
• reduction in the term of the mortgage.
Reduction in Total Mortgage Payment: The new total mortgage payment is 5 percent lower than the
total mortgage payment for the mortgage being refinanced.
Items that can be included in a Louisville Kentucky FHA Streamline Refinance are:
• The existing unpaid balance
• Interest due for the current month on the FHA loan being paid off
• A credit for excess funds in the borrower’s escrow account
• A charge for escrow shortages or negative escrow balance due
Items that cannot be included in the streamline refinance payoff:
• Fax fees or other miscellaneous fees shown on the payoff
• Any other debt including seasoned subordinate liens or money due an ex-spouse
• The new loan may not include any delinquent interest accrued from late payments
• Current FHA loan must be FHA insured in the state of Kentucky .
LOUISVILLE KY FHA REFINANCE-STREAMLINE WITH APPRAISAL
•
• Existing second liens may be subordinated, max CLTV is 125%.
• Mortgage must be current at time of closing and be 0X30 in the last 12 months.
• Loan amount may exceed original mortgage amount if supported by current appraised value.
• Incidental cash back at closing limited to a maximum $500.
•
Kentucky FHA Streamline Guidelines
Maximum Loan Amount
The maximum loan amount is the lower of:
1) 97.75% of the appraised value of the property plus the new UFMIP that will be charged on the refinance
-OR-
2) Outstanding principal balance minus the applicable refund of UFMIP, plus closing costs, prepaid items to
establish the escrow account and the new UFMIP that will be charged on the refinance.
• Current FHA loan must be FHA insured.
REFINANCE-STREAMLINE WITHOUT APPRAISAL
• Mortgage must be current at time of closing and be 0X30 in the last 12 months.
• Incidental cash back at closing limited to a maximum $500.
• Eligible on 203(b).
Maximum Loan Amount
To determine the maximum loan amount, use the outstanding principal balance minus the applicable refund
of the UFMIP plus the new UFMIP that will be charged on the refinance.
For other guidelines not listed in this manual, refer to general FHA (Federal Housing
Authority) guidelines located at: www.hud.gov or www.hudclips.org
Fill out my form!
Louisville Kentucky FHA Streamline Refinances are FHA-to-FHA rate/term refinances designed to reduce the borrower’s principal and interest payments. FHA offers the following types of processing:
• Streamline with Appraisal
• Streamline without Appraisal
.
Mortgage Payment History
The mortgage history must be 0X30 in the last 12 months, regardless of the AUS decision.
Net Tangible Benefit
The lender must determine that there is a net tangible benefit as a result of the streamline refinance transaction,
with or without an appraisal. Net tangible benefit is defined as:
• reduction in the total
• refinancing from an adjustable rate mortgage (ARM) to a fixed rate mortgage,
mortgage payment (principal, interest, taxes and insurances, homeowners’
association fees, ground rents, special assessments and all subordinate liens),
OR
• reduction in the term of the mortgage.
Reduction in Total Mortgage Payment: The new total mortgage payment is 5 percent lower than the
total mortgage payment for the mortgage being refinanced.
Items that can be included in a Louisville Kentucky FHA Streamline Refinance are:
• The existing unpaid balance
• Interest due for the current month on the FHA loan being paid off
• A credit for excess funds in the borrower’s escrow account
• A charge for escrow shortages or negative escrow balance due
Items that cannot be included in the streamline refinance payoff:
• Fax fees or other miscellaneous fees shown on the payoff
• Any other debt including seasoned subordinate liens or money due an ex-spouse
• The new loan may not include any delinquent interest accrued from late payments
• Current FHA loan must be FHA insured in the state of Kentucky .
LOUISVILLE KY FHA REFINANCE-STREAMLINE WITH APPRAISAL
•
• Existing second liens may be subordinated, max CLTV is 125%.
• Mortgage must be current at time of closing and be 0X30 in the last 12 months.
• Loan amount may exceed original mortgage amount if supported by current appraised value.
• Incidental cash back at closing limited to a maximum $500.
•
Kentucky FHA Streamline Guidelines
Maximum Loan Amount
The maximum loan amount is the lower of:
1) 97.75% of the appraised value of the property plus the new UFMIP that will be charged on the refinance
-OR-
2) Outstanding principal balance minus the applicable refund of UFMIP, plus closing costs, prepaid items to
establish the escrow account and the new UFMIP that will be charged on the refinance.
• Current FHA loan must be FHA insured.
REFINANCE-STREAMLINE WITHOUT APPRAISAL
• Mortgage must be current at time of closing and be 0X30 in the last 12 months.
• Incidental cash back at closing limited to a maximum $500.
• Eligible on 203(b).
Maximum Loan Amount
To determine the maximum loan amount, use the outstanding principal balance minus the applicable refund
of the UFMIP plus the new UFMIP that will be charged on the refinance.
For other guidelines not listed in this manual, refer to general FHA (Federal Housing
Authority) guidelines located at: www.hud.gov or www.hudclips.org
call 502 905 3708 for our free Louisville Kentucky FHA streamline Refinance analysis |
Fill out my form!
Labels:
FHA,
FHA Guidelines for Loan in Kentucky on a home,
FHA Streamline Refinance,
kENTUCKY FHA Program Quick Reference,
Louisville Ky FHA Loans,
refinance,
Streamline
I have helped over 1300 Kentucky families buy or refinance their home over the last 20 years. Realizing that this is one of the biggest, most important financial transactions a family makes during their lifetime, I always feel honored and respected when I am chosen to originate their personal home loan. You can count on me to deliver on what I say, and I will always give you honest, up-front personal attention you deserve during the loan process.
I have several advantages over the large banks in town. First, I can search and negotiate for your loan options through several different mortgage companies across the country to get you the best deal locally. Where most banks will offer offer you their one set of loan products. I have access to over 10 different mortgage companies to broker your loan through to get you the best pricing and loan products that may not fit into the bank's program due to credit, income, or other underwriting issues.
You will not get lost in the shuffle like most borrowers do at the mega banks; you're just not a number at our company, you are a person and we will treat you like one throughout the entire process.
Louisville KentuckyHome Mortgage Loans: Mortgage Refinance Tips
Louisville Kentucky Home Mortgage Loans: Mortgage Refinance Tips
Joel Lobb (NMLS#57916)Senior Loan Officer
502-905-3708 cell
502-813-2795 fax
jlobb@keyfinllc.com
Key Financial Mortgage Co. (NMLS #1800)*
107 South Hurstbourne Parkway*
Louisville, KY 40222*
Joel Lobb (NMLS#57916)Senior Loan Officer
502-905-3708 cell
502-813-2795 fax
jlobb@keyfinllc.com
Key Financial Mortgage Co. (NMLS #1800)*
107 South Hurstbourne Parkway*
Louisville, KY 40222*
Labels:
conventional rates ky,
Credit Score,
Current Mortgage Rates in KY,
Jumbo Rates,
Louisville Kentucky Mortgage Rates,
refinance
I have helped over 1300 Kentucky families buy or refinance their home over the last 20 years. Realizing that this is one of the biggest, most important financial transactions a family makes during their lifetime, I always feel honored and respected when I am chosen to originate their personal home loan. You can count on me to deliver on what I say, and I will always give you honest, up-front personal attention you deserve during the loan process.
I have several advantages over the large banks in town. First, I can search and negotiate for your loan options through several different mortgage companies across the country to get you the best deal locally. Where most banks will offer offer you their one set of loan products. I have access to over 10 different mortgage companies to broker your loan through to get you the best pricing and loan products that may not fit into the bank's program due to credit, income, or other underwriting issues.
You will not get lost in the shuffle like most borrowers do at the mega banks; you're just not a number at our company, you are a person and we will treat you like one throughout the entire process.
USDA Rural Housing’s Streamline Refinance Pilot Program has great news for homeowners with a USDA home loan......
USDA Rural Housing’s Streamline Refinance Pilot Program has great news for homeowners with a USDA home loan......
Apply for a home loan by clicking the link below:It's free and takes less than 5 minutesOr call us at 502-905-3708 for your free application over the phone
(USDA Section 502 Guaranteed loans) allowing homeowners to include closing costs and other settlement charges into a lower rate USDA mortgage with streamlined guidelines making it easier to refinance to a lower interest rate and payment. USDA mortgages offer buyers the ability to finance 100% of the purchase price when purchasing a primary residence but now USDA is making it much easier to refinance these USDA mortgages so homeowners can take advantage of today’s low fixed mortgage rates.
Effective June 22, 2012 Primelending began accepting the USDA Rural Housing Refinance Pilot Program and the financing of the principal balance of the existing USDA loan plus the accrued interest used to calculate the payoff, and any eligible closing costs. The two year pilot refinancing program is available to homeowners with USDA mortgages in 19 eligible states including Alabama, Arizona, California, Florida, Georgia, Illinois, Indiana, Kentucky Michigan, Mississippi, Nevada, New Jersey, New Mexico, North Carolina, Ohio, Oregon, Rhode Island, South Carolina, and Tennessee. But, if a borrower with a USDA loan in any of the other 31 states is looking to refinance, there is still a USDA streamline refinance that does not require an appraisal but it cannot finance the closing costs like the Pilot Refinance Program.
The USDA Pilot refinance program is available to help homeowners with a USDA mortgage refinance at a lower interest rate without an appraisal, inspection, or calculating debt to income ratios as long as the property is still in an eligible area and the household is under the USDA income limit for the county in which the property is located. With the new USDA refinance guidelines, it provides a less restrictive form of refinancing to save money.
PrimeLending is one of the leading USDA lenders in the country and the Russell Smith team is one of the top producing USDA loan officers as well and both have extensive experience in USDA Rural Housing Mortgage Loans.
The USDA Rural Development Pilot refinance program guidelines include the following:
- The interest rate on the new USDA loan must be a minimum or 1.00% lower than the existing USDA loan
- Pilot eligible states include AL, AZ, CA, FL, GA, IL, IN, KY, MI, MS, NV, NJ, NM, NC, OH, OR, RI, SC, & TN. All other states are ineligible
- Rural Refinance Pilot loans must meet basic eligibility: Property must be in a USDA eligible area and the household income must be under the USDA county income limit
- New term of the refinance loan must be 30 years
- Upfront USDA Guarantee fee is 2.00% of the loan amount which can be financed on top of the base loan amount
- Annual fee of 0..40%. This would be new for most USDA borrowers since this is fairly new for USDA guaranteed loans. This fee is paid monthly in the payment. For example: $100,000 loan would be $30 per month. $100,000 x .40% / 12 = $30..00
- New USDA loan refinance loan may include the principal balance of the existing USDA guaranteed loan plus accrued interest through the payoff date, and any eligible closing costs
- No cash out is permitted
- Reasonable and customary closing costs and other fees may be collected from the borrower by the originating company
- Income verification for all adult household members is required for income eligibility determination only, not for determining repayment ability
- Ratio waivers are not required as income is just used for compliance income calculation only for verifying the income is under the county USDA household income limit
To apply for the Kentucky USDA Pilot Refinance Program, click here.
Apply for a home loan by clicking the link below:It's free and takes less than 5 minutesOr call us at 502-905-3708 for your free application over the phone
Labels:
502 USDA,
pilot refinance,
refinance,
rhs loans kentucky,
Rural Housing/ USD LOANS ZERO DOWN,
USDA RURAL HOUSING
I have helped over 1300 Kentucky families buy or refinance their home over the last 20 years. Realizing that this is one of the biggest, most important financial transactions a family makes during their lifetime, I always feel honored and respected when I am chosen to originate their personal home loan. You can count on me to deliver on what I say, and I will always give you honest, up-front personal attention you deserve during the loan process.
I have several advantages over the large banks in town. First, I can search and negotiate for your loan options through several different mortgage companies across the country to get you the best deal locally. Where most banks will offer offer you their one set of loan products. I have access to over 10 different mortgage companies to broker your loan through to get you the best pricing and loan products that may not fit into the bank's program due to credit, income, or other underwriting issues.
You will not get lost in the shuffle like most borrowers do at the mega banks; you're just not a number at our company, you are a person and we will treat you like one throughout the entire process.
Refinancing Mortgages
Refinancing Mortgages
WDRB 41 Louisville - News, Weather, Sports Community
Joel Lobb (NMLS#57916)Senior Loan Officer
502-905-3708 cell
WDRB 41 Louisville - News, Weather, Sports Community
Joel Lobb (NMLS#57916)Senior Loan Officer
502-905-3708 cell
I have helped over 1300 Kentucky families buy or refinance their home over the last 20 years. Realizing that this is one of the biggest, most important financial transactions a family makes during their lifetime, I always feel honored and respected when I am chosen to originate their personal home loan. You can count on me to deliver on what I say, and I will always give you honest, up-front personal attention you deserve during the loan process.
I have several advantages over the large banks in town. First, I can search and negotiate for your loan options through several different mortgage companies across the country to get you the best deal locally. Where most banks will offer offer you their one set of loan products. I have access to over 10 different mortgage companies to broker your loan through to get you the best pricing and loan products that may not fit into the bank's program due to credit, income, or other underwriting issues.
You will not get lost in the shuffle like most borrowers do at the mega banks; you're just not a number at our company, you are a person and we will treat you like one throughout the entire process.
Mortgage Settlement Process by the Federal Reserve
How Do I Refinance a Conventional Loan?
Last update: August 18, 2010
http://www.federalreserve.gov/pubs/settlement/default.htmhttp://www.federalreserve.gov/pubs/settlement/default.htm
Fill out my form!
The mortgage settlement process--sometimes called mortgage closing--can be confusing. A settlement may involve several interested parties and a variety of documents and fees. This guide helps you understand the steps involved in the settlement process. Although the focus here is on settlements for home purchases, much of the guidance will also apply if you refinance a mortgage.
Settlement costs can be high, so it pays to shop around for settlement services and negotiate with the home seller, your mortgage lender, and your real estate attorney or settlement agent. The less you pay in settlement costs, the more funds you will have to get started in your new home.
Negotiate the terms of your purchase
Customs and practices during settlement often vary regionally, with buyers and sellers free to negotiate which party pays certain fees. In slow-moving real estate markets, for example, the seller may agree to pay certain settlement costs including points or fees usually assumed by the buyer. In fast-moving markets, the buyer may have to agree to pay more costs to close the deal as an incentive to the seller of a property in great demand. Whatever you negotiate should be in writing and will become the basis of the sales contract. However, be careful: if some buyer's costs are shifted to the seller, the price you pay for the property may increase if the seller wants to recoup those costs. You can reduce some costs by shopping around for settlement services. The more you know about the settlement process and related costs, the better your chances are for saving money at settlement time.
Because settlement practices vary significantly based on your locale, it is difficult to provide reliable estimates for costs that fit every settlement situation you may encounter. However, one rule of thumb for buyers is to figure that settlement costs will be about 3% of the price of your home. In some relatively high-tax areas of the country, however, 5% to 6% may be more common.
Some settlement costs, such as homeowner' s insurance, private mortgage insurance, or points, can be more expensive if your credit rating is low, too. Knowing your credit score, therefore, can help you understand how lenders will evaluate your applications and how that score may impact the cost of your mortgage loan and help you to anticipate your settlement costs. Your lender is required to give you a copy of your credit score as part of the settlement process. Make sure you get a copy of your score.
Understand the types of settlement costs
Most people associate settlement costs with mortgage loan charges. These fees and charges vary, so it pays to shop around for the best combination of mortgage terms and settlement costs. Mortgage-related costs that may apply to your loan include the following items.
Application fee
Imposed by your lender or broker, this charge covers the initial costs of processing your loan request and checking your credit report.
Estimated cost: $65 to $640, including the cost of the credit report for each applicant Median cost: $365
Loan origination fee
The origination fee (also called underwriting fee, administrative fee, or processing fee) is charged by the lender for evaluating and preparing your mortgage loan. This fee can cover the lender's attorney's fees, document preparation costs, notary fees, and similar charges.
Estimated cost: $2,130 to $3,105 with a 5% down payment; $1,984 to $2,865 with a 10% down payment
Median cost: $2,734 with a 5% down payment; $2,537 with a 10% down payment
Points
Points are a one-time charge that may be negotiated with the lender, usually to reduce the interest rate you pay over the life of your loan. One point equals 1% of the loan amount. For example, one point on a $100,000 loan would be $1,000. In some cases--especially in refinancing--points can be financed by adding them to the amount that you borrow. However, if you pay the points at settlement, they are deductible on your income taxes in the year they are paid (different deduction rules apply when you refinance or purchase a second home). In your purchase offer, you may want to negotiate with the seller to have the seller pay all or a portion of the points.
Estimated cost: 0% to 3% of the loan amount
Appraisal fee
Lenders want to be sure that the purchased property is worth at least as much as the loan amount. An appraisal fee pays for a determination of the value of the home and lot you want to purchase or refinance. Some lenders and brokers include the appraisal fee in the application fee; you can ask the lender for a copy of the appraisal. If you are refinancing and have a recent appraisal of the property, some lenders may waive the requirement for a new appraisal.
Estimated cost: $263 to $444
Median cost: $292
Lender-required home inspection fees
Lenders may require a termite inspection and an analysis of the structural condition of the property by an engineer or consultant. In rural areas, lenders may require a septic system test (if applicable) and a water test to make sure the well and water system will maintain an adequate supply of water for the house (this is usually a test for water quantity and not quality; your local health department may require a water quality test as well, but may do so outside the settlement process and with a separate payment). Keep in mind that such inspections are for the benefit of the lender; you may want to request your own inspection to make sure the property is in good/acceptable condition.
Estimated cost: $300 to $500
Prepaid interest
Your first regular mortgage payment is usually due about six to eight weeks after you settle (for example, if you settle in August, your first regular payment will be due on October 1; the October payment covers the cost of borrowing the money for the month of September). Interest costs, however, start as soon as you settle. The lender will calculate how much interest you owe for the part of the month in which you settle (for example, if you settle on August 16, you would owe interest for 16 days--August 16 through 31).
Estimated cost: Depends on the loan amount, interest rate, and number of days since settlement (for example, a $120,000 loan at 6% for 16 days, about $220; a $142,500 loan at 6% for 16 days, about $375).
Private mortgage insurance (PMI)
If your down payment is less than 20% of the value of the house, the lender will usually require mortgage insurance. The insurance policy covers the lender's losses if you do not make the loan payments. Typically, you will pay a PMI monthly along with each month's mortgage payment. Your PMI can be canceled at your request, in writing, when you reach 20% equity in your home (based on your original purchase price) if your mortgage payments are current and you have a good payment history. By federal law your PMI payments will automatically stop when you acquire 22% equity in your home (based on the original appraised value of the house) as long as your mortgage payments are current.
Estimated cost: $50 to $100 per month
Some lenders will pay for LPMI--or lender's private mortgage insurance--and, in turn, charge a higher interest rate to you. Unlike the PMI that you might pay, with LPMI there is no automatic cancellation of the insurance charge once you acquire 22% equity. To eliminate LPMI, you must refinance the loan, which in turn means carefully considering market interest rates and settlement costs at the time to see if refinancing would be advantageous to you, rather than keeping your current mortgage and its attendant costs.
FHA, VA, and RHS fees
The Federal Housing Administration (FHA) offers insured mortgages and the Veterans Administration (VA) and the Rural Housing Service (RHS) offer mortgage guarantees. If you are getting a mortgage insured by the FHA or guaranteed by the VA or the RHS, you will have to pay FHA mortgage insurance premiums or VA or RHS guarantee fees. As with PMI, FHA insurance premium payments will stop when you acquire 22% equity in your home. FHA fees are about 1.75% of the loan amount.1VA guarantee fees range from 1.25% to 3.3% of the loan amount, depending on the size of your down payment (the higher your down payment, the lower the fee percentage).2 RHS fees are 2.00% of the loan amount.3
Homeowner's insurance
Your lender will require that you arrange for homeowner's insurance coverage (sometimes called hazard insurance) at settlement. This insurance protects against physical damage to the house by fire, wind, vandalism, and other causes, and ensures that the lender's investment in your purchase will be secured even if the house is destroyed. If you are buying a condominium, hazard insurance may be part of your monthly condominium fee; you may also want to secure insurance coverage for your home furnishings and valuables.
Estimated cost: $300 to $1,000 (Depending on the value of the home and the amount of coverage; you can expect a cost of about $3.50 per $1,000 of the home purchase price.)
Median cost: $744
Flood determination fee
If your home is in a special flood hazard area where flood insurance is mandated, lenders cannot offer you a mortgage loan unless you buy flood insurance. Regardless, your lender may charge a fee to find out whether the home is in a flood hazard area. Flood insurance protects the lender if flooding damages or destroys your home.
Estimated cost: $10 to $16 for the search (This is not the cost for the flood insurance; flood insurance, if required, would be in addition to your homeowner's insurance and may cost from $500 to $5,925 depending on location and property value and loan balance.4 )
Median cost: $12
Escrow (or reserve) funds
Some lenders require that you set aside money in an escrow (or reserve) account to pay for property taxes, homeowner's insurance, and flood insurance (if applicable). Lenders use escrow funds to ensure that these items/expenses are paid on time and to protect their interest in your home. With an escrow account, money is held by the lender or its agent, which then pays the taxes and insurance bills when they are due. At settlement, you may need to provide funds for this account, depending on when payments will be due. For example, if you buy your home in August and property taxes are due the following January, you will need to deposit funds into your escrow account at settlement so that you can cover tax payments when they are due in January.
Property Survey costs
Lenders require a property survey to confirm the location of buildings and improvements on the land you are purchasing. Some lenders require a complete (and more costly) survey to ensure that the house and other structures are legally where you and the seller say they are.
Estimated cost: $84 to $600
Median cost: $154
Other miscellaneous settlement costs
Depending upon the location and type of property purchased--and the extra settlement services you or your lender request--you may also have to pay some of the following fees and assessments.
Learn about charges to establish and transfer ownership
Title search
The goal of a title search is to assure you and your lender that the seller is the legal owner of the property and that there are no outstanding claims or liens against the property that you are buying. The title search may be performed by a lawyer, an escrow or title company, or other specialist.
Title searches can be time- and labor-intensive. Public real estate records can be spread among several local government offices, including surveyors, county courts, tax assessors, and recorders of deeds. Liens, records of deaths, divorces, court judgments, and contests over wills--all of which can affect ownership rights--must also be examined.
If real estate records are computerized, the title search can be completed fairly quickly. In some cases, however, the title search may involve visiting courthouses and examining other public records and files, which is more time-consuming.
Estimated cost: Costs vary regionally.
Title insurance
Most lenders require a title insurance policy to protect the lender against an error in the results of the title search. If a problem arises, the insurance covers the lender's investment in your mortgage.
The cost of the policy (a one-time premium) is usually based on the loan amount and is often paid by the buyer. However, you may negotiate with the seller to pay all or part of the premium.
The title insurance required by the lender protects only the lender. To protect yourself against title problems, you may want to buy an "owner's" title insurance policy. Normally the additional premium cost is based on the cost of the lender's policy, but it can vary based on your locale.
Some advice on keeping title insurance costs low: if the house you are buying was owned by the seller for only a few years, check with the seller's title company. You may be able to get a "re-issue rate," because the time between title searches was short. As well, if you are refinancing, you may be able to get a "re-issue rate" on your title insurance. The premium is likely to be lower than the regular rate for a new policy. If no claims have been made against the title since the previous title search was done, the insurer may consider the property to be a lower insurance risk.
Usually, you will have to buy title insurance from a company acceptable to your lender. However, you can still shop around for the best premium rates (which can vary depending on how much competition there is in a market area). If you decide to buy an "owner's title policy," look for one with as few exclusions from coverage as possible. Exclusions are listed in each policy, and if a policy has many exclusions--that is, situations under which the insurer will not pay for your title problems--you may end up with little/scant coverage.
Estimated cost: The cost of title services and title insurance varies by state. For example, a lender's policy on a $100,000 loan can range from $175 in one state to $900 in another. In some states, the price can even vary by county.
Settlement companies and others settlement agents
Settlements are conducted by title insurance companies, real estate brokers, lending institutions, escrow companies, or attorneys. In most cases, the settlement agent provides a service to the lender, and you may be required to pay for these services. You can also hire your own attorney to represent you at all stages of the transaction, including settlement.
In some regions, all parties involved in the sale--the buyer; the seller; the lender; the real estate agents; attorneys for the buyer, seller, and lender; and representatives from the title firm--may meet to sign forms and transfer funds. In other regions, settlement is handled by a title or escrow firm, which collects all the funding, paperwork, and signatures and makes the necessary disbursements. This firm delivers the check to the seller and the house keys to you.
Estimated cost: Costs for settlement services vary widely, depending on the services provided. Regardless of the way settlement is handled in your region, shop around and ask for information on all services provided and all fees charged.
Consider state and local government fees and taxes
In some parts of the country, transfer and recording fees are low. In other parts of the country, costs of transfer fees, recording fees, and property taxes collected by local and state governments may be as much as 3% of the loan amount. Some of these fees, such as the recording fee and transfer fee, are one-time fees. Although there is no way to avoid paying these fees and taxes, you may be able to negotiate with the seller to assume some of these costs. But remember, you must include these terms in the purchase offer for the property.
Funds to cover property taxes may go into an escrow account. The amount you will need depends on when property taxes are due and the timing of the settlement. The lender should be able to give you an approximation of these costs at the time you apply for the mortgage.
Understand "all-in-one" pricing of settlement costs
Some lenders have bundled most of their settlement costs into a single price. Generally, bundled arrangements combine the following fees:
This "all-in-one" price, however, does not include all of the fees charged at settlement. You will also need funds for the following:
prepaid interest (based on the day of the month you settle)
mortgage and transfer taxes (determined by your state or local taxing agency) private mortgage insurance (if needed) homeowner's (hazard) insurance flood insurance (if needed), and reserve (or escrow) funds for property taxes and homeowner's insurance
Ask for estimates of settlement costs
At various points in the loan application process, you are entitled to estimates of the costs and fees associated with arranging your mortgage and completing the settlement process.
"Good faith estimate" (GFE)
With such a long list of potential charges at settlement, it is important to know which ones will apply to your purchase. The Real Estate Settlement Procedures Act (RESPA) requires your mortgage lender to give you a "good faith estimate" of all your expected closing costs within three business days of the submission of your loan application, whether you are purchasing or refinancing the home. Although called a good faith estimate, it is important to note that your actual expenses at closing may be somewhat different. The standardized GFE form lists which costs will change prior to settlement and the maximum amount by which they are allowed to change. If you are purchasing the home, a booklet provided by your broker or mortgage lender, Buying Your Home: Settlement Costs and Helpful Information5, explains the role of the good faith estimate in the settlement process.
Truth in Lending information
For home purchases, the lender is required under the Truth in Lending Act to provide a statement containing "good faith estimates" of the costs of the loan within three business days after receiving your application. This estimate will include your total finance charge and the annual percentage rate (APR). The APR expresses the cost of your loan as an annual rate. This rate is likely to be higher than the stated contract interest rate on your mortgage because it takes into account discount points, mortgage insurance, and certain other fees that can add to the cost of your loan. When refinancing your mortgage, you will receive truth-in-lending disclosures before you settle. Until you receive those disclosures, the creditor and other parties cannot charge you fees related to your loan application, except for a fee for obtaining your credit history.
"HUD-1/HUD-1A" statement
When you purchase a home or refinance your mortgage, RESPA also requires the lender to give you a copy of your HUD-1 or HUD-1A Settlement Statement the day before you go to settlement, if you request it. This final statement of settlement costs will show all the fees and charges you will be expected to pay at settlement. The HUD-1 also states the initial terms of the loan, including the monthly amount due.
The revised HUD-1 is designed for easy comparison with your good faith estimate. Most costs in the "800" to "1300" series of the HUD-1 form are labeled with the corresponding section of the GFE for reference. Included in the HUD-1 are comparison charts for the estimated costs provided on the GFE and actual costs paid at closing. These will be completed by the settlement agent for you before closing with information provided by your lender.
Fees paid outside of settlement/closing
Some fees may be listed on the HUD-1/HUD-1A and marked as "Paid Outside of Closing" (or POC). You will pay some of these fees, such as for credit reports and appraisals, before settlement. Other fees, such as your direct payments to a mortgage broker, you will pay at settlement. Payments by other parties, for example, from the lender to the mortgage broker, also may be marked as POC.
Sample Settlement Costs
Because costs may vary from one area to another and from one lender to another, the following example is an estimate only. This example is based on a $200,000 home with a 5% or a 20% down payment. Excluding reserves for property taxes and down payment, settlement costs for the 5% down payment loan vary between $6,235 and $19,930 (median cost $13,030); settlement costs for the 20% down payment loan vary between $5,800 and $18,440 (median cost $11,585). Your costs may be higher or lower than the examples below.
Consider these settlement cost tips
This information has been prepared to help you make the important decisions involved in buying and financing your home. However it should not be viewed as a replacement for professional advice. Talk with attorneys, mortgage lenders, real estate agents, and other advisers for information about lending practices, mortgage instruments, and your own interests before you commit to a specific loan.
1. Fee information for loans insured by the FHA is available at http://Portal.hud.gov. Return to text
2. Information on VA guarantee fees is available athttp://homeloans.va.gov/docs/funding_fee_tables.doc. Return to text 3. Information on RHS fees is available at www.Rurdev.usda.gov. Return to text 4. Flood insurance information is available at www.Floodsmart.gov. Return to text 5. Available at http://www.hud.gov/offices/hsg/ramh/res/stcosts.pdf. Return to text |
Last update: August 18, 2010
http://www.federalreserve.gov/pubs/settlement/default.htmhttp://www.federalreserve.gov/pubs/settlement/default.htm
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