Professional Home Staging and Photography Blog: The Mortgage Minute – April 28, 2008

The Mortgage Minute – April 28, 2008

Looking Back

Mortgage interest rates rose again last week on better than expected earnings reports and decreased expectations as to the size of this week's Fed rate cut. Many now believe that they will only cut the rate by 0.25%, instead of the 0.50% from earlier predictions.

New home sales plunged 8.5% in March over the previous March, while sales of existing homes were down 2.0% over the same time frame.

Looking Forward

Look for investors to be keying on the Federal Open Market Committee (The FED) meeting Tuesday and Wednesday. While most are expecting another 1/4% rate cut, there is a growing number that believe that we may be better off if they don't do anything. The feeling is that doing nothing would be an indication that we have hit the bottom of the credit crisis, and that the economy is poised to rebound.

Why Are Lender Fees So Confusing?

One of the worst questions a consumers can ask when determining which mortgage company to use is "what are your closing costs?" Too often, when consumers are estimating what their closing fees are going to be, they ask the above question. While the good faith estimate is designed to prepare them for the expenses involved with purchasing real estate, some lenders have found a way to work this to their advantage.

Closing costs are broken into three broad categories; lender fees, pre-paids and escrows (taxes, insurance and interest), and title fees. Two of these three (pre-paids and title fees) will be the same, no matter which lender the consumer chooses. Only lender fees will vary. The problem arises when consumers fail to break these costs down. 

Example; A consumer calls two different lenders and is told by both that the closing costs will be around $4000. Lender A estimates that title and pre-paids will be around $3000 and lender fees to be $1000, while lender B estimates that title and pre-paids will be around $3500 and lender fees to be $500. In the end, because the title and pre-paids will be the same regardless of the lender, Lender B will actually end up being $500 cheaper.

 

East Bridgewater, MA 02333
Phone: (508) 443-1332

Lew Corcoran, ASP®, IAHSP, IAHSP-CB
Accredited Home Staging Professional
Professional Real Estate Photographer

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Comment balloon 1 commentLew Corcoran, ASP® • April 28 2008 05:42AM

Comments

Well, if they ask for the Lender's fees, why not say $500 or $1,000.  If a "Good Faith Estimate" is provided, then I would be sure to point out which are my fees and which were estimated and outside my control.  The variables are too great not to point out exactly what the lender fees are for comparison purposes.
Posted by Rebecca Schrader (Competitive Insurance of Dundee) over 10 years ago

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