Mortgage rates remain low and the housing market is showing signs of recovery. Even new construction is picking up. And best of all, the Consumer Financial Protection Bureau issued guidelines in January which protects consumers from the kinds of mortgages that contributed to the financial market and housing market crash.
Still, there are many ways that a buyer can end up short end of the stick by paying more than they should. The devil, as always, is in the details, and when it comes to home buying, those details are deeply imbedded in the mortgage documents. For instance, be careful to rely on the Good Faith Estimate to determine the closing costs and the amount of the loan over a 20 or 20 year term. This is because the Good Faith Estimate really just lumps all of the closing costs onto one document and it makes it very hard to see the fees which could be hidden in the loan.
Another safe guard is to S…L…O…W down the closing. Of course, there are times when a prospective homeowner feels the need to get to closing as soon as possible – marriage, a new baby may be on the way, or you just gotta get that house, etc. When this occurs, there is often the urge to tell the mortgage company something like “Look, can you get my deal done ASAP?”. This will undoubtedly lead to many unwelcome surprises at closing, when additional fees or costs are added. The homeowner can throw a fit and protest, but that will most likely be met with the broker asking if they would like to cancel the deal, which often comes with $1,000+ cancellation fee. One of the ways to avoid this is to choose a mortgage that has no closing costs. The interest rate will probably be higher, but you’ll at least know what you’re paying for. But beware—while this may be a wise decision in the short run, it could end up costing a lot more over the life of the mortgage because of the higher rate.
Contact Shaffer & Gaier
To set up a free initial consultation, contact our office online or call our foreclosure hotline at 855-289-1660. Or call our office location in Philadelphia at 215-751-0100, or in New Jersey at 856-429-0970.