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September, 2000 Newsletter

+++++++++++ September 13, 2000 +++++++++++++++++++

CONTENTS:
Introduction
Mortgage Rate Update: More Stability
Recent Site Updates: Good Faith Estimate
This Month's Tip: Closing Costs
++++++++++++++++++++++++++++++++++++++++++++
Introduction

Welcome to the September edition of the Home Buyer's
Information Newsletter. It definitely has been an up
and down year for the Real Estate market, with both
existing home sales and new home sales see-sawing,
up one month and down the next. In addition, some
areas that were experiencing very strong market
conditions earlier in the year have quieted just
a bit, which is a positive development from a
buyer's perspective since it has become a bit less
of a seller's market (higher prices and quicker
sales) and more a buyer's market (more opportunity
for some negotiation).

+++++++++++++++++++++++++++++++++++++++++++++
Mortgage Rate Update: More Stability
We've now seen nearly 2 months of reasonably stable
mortgage rates--a rare situation in the last year
when rates have been extremely volatile. In general,
30 year fixed rates have remained under the 8% mark
and 15 year fixed rates below 7.75% Will the
stability continue? Much is dependent on the rate
of inflation, which has been moderate at best.
Oil prices and supply will likely have a big
effect on the inflation picture in the coming months
which could be bad news for many pricing levels.
Should there be evidence that a higher level of
inflation has returned, look for mortgage rate
increases to follow shortly afterward.

For more information on mortgages, visit the
Mortgage Section
++++++++++++++++++++++++++++++++++++++++++++++
Recent Site Updates: Good Faith Estimate
Shortly after you apply for a mortgage, your lender will
supply you with a "Good Faith Estimate" which is an
estimate of the closing costs associated with buying your
home. We've added an
example of the form.

You can always find out "
Whats New" at the Home Buyer's
Information Center

++++++++++++++++++SPONSOR++++++++++++++++++++
Sponsor: LendingTree

LendingTree Mortgages
LendingTree Mortgage In this volatile financial and interest rate
environment getting as many loan comparisons as
possible is crucial. At LendingTree you can submit
one simple loan request form and within a few business days
get up to 4 bona-fide offers from lenders competing for your business.
Get more information here.
++++++++++++++++++++++++++++++++++++++++++++++

This Month's Tip: Dealing With Closing Costs

For many homebuyers, as they are looking at and
considering homes and evaluating their budgets,
closing costs are often considered only as an
after-thought (or worse, not considered at all).
Since closing costs can add up to as much (or more)
than the downpayment, these costs will need to be an
important consideration as you determine what your
total cash outlay is going to be at settlement time.

What Are Closing Costs?

Closing (or settlement) costs are those charges and fees
associated with buying a home that are in addition to
the downpayment. They include such items as points,
deed transfer fees, professional fees, homeowners
insurance costs, taxes, etc. Although there are
occasions where some closing costs can be rolled into
the loan amount (and the monthly mortgage payment)
the majority must be paid--in cash--at the closing or
settlement. In determining the amount of closing costs
to expect, there are a number of variables involved
including the type of mortgage loan, how many points
are with the loan, state laws, and what is customary
for the buyer to pay in your area to consider. As a
very rough rule of thumb, you can figure that closing
costs will amount to 3-6% of the selling price of the
home.

Common Closing Costs

The following are some examples of common costs that
are associated with closing (and where the money
goes!) Remember, these can vary a good bit by the
factors mentioned above--type of loan, where the
property is located and what is customary for the
buyer to pay for in your area.

POINTS Each point, which is a form of up-front
interest, is equal to 1% of the loan amount. For
example, a $100,000 loan with 2 points would mean
$2000 would be needed at closing. These may include
origination fee points as well as discount points.
PAID TO: Lender

LOAN PROCESSING FEE
PAID TO: Lender

LOAN DOCUMENT FEE
PAID TO: Lender

APPRAISAL FEE
PAID TO: Lender
(Usually paid at time of application)

CREDIT REPORT FEE
PAID TO: Lender
(Usually paid at time of application)

SURVEY
PAID TO: Surveyor

ATTORNEY or CLOSING AGENT FEE
PAID TO: Closing Agent

PRE-PAID MORTGAGE INSURANCE PREMIUM or
PRIVATE MORTGAGE INSURANCE
PAID TO: Lender

PRE-PAID HOMEOWNERS INSURANCE
PAID TO: Insurance Company
(Usually 1 year pre-paid)

REAL ESTATE TAXES
PAID TO: Local government
(Pro-rated)

INTEREST until 1st day of the month
PAID TO: Lender

DEED TRANSFER/MORTGAGE RECORDING FEES
PAID TO: Local government

OTHER RECORDING FEES
PAID TO: Local government

TITLE INSURANCE
PAID TO: Title Insurance Company

There could be more--or less--closing costs for
which you may be responsible.

Good Faith Estimate

Shortly after you apply for a mortgage, your lender
will supply you with a "Good Faith Estimate" of your
closing costs. This is an approximation of all the
costs that will be associated with your closing.
The key word here is "estimate" since your actual
closing costs may vary a bit--either higher or lower--
from what is quoted. A good faith estimate is a
reasonably close guide to the cash you will need, but
it is not a guaranteed document. The actual amount
will be disclosed on your final settlement statement,
available a few days prior to closing.

Can (and Will) a Seller Pay Your Closing Costs?

A seller is not required to pay ANY of a buyer's
closing costs. Although there may be certain types
of mortgages that will make some of the buyer's
closing cost the responsibility of the seller (for
example, 1 point) the seller is not obliged to accept
such an offer. They can wait for another buyer who
does not need closing costs paid.

Whether or not a seller will help with closing costs
is determined, to a large degree, by the strength or
weakness of the Real Estate market in the area. If
you are interested in a correctly priced home in an
active market, it is less likely that a seller will
pay any closing costs as opposed to a slower market
where potential buyers are more scarce (making the
home more difficult to sell).

Keeping Closing Costs at a Minimum

Most closing costs, by their nature, are locked in
stone. For example, if all property transfers in your
area are subject to a transfer tax payable by the new
owner of the property, you will need to pay the tax.
Homeowners Insurance is required on all properties in
which a mortgage is involved. The closing Agent or
Attorney will charge a fee for their services.

If you are low in cash, you may want to consider some
of the following hints for reducing your overall
expendure at closing time.

1) Interest rates and points directly affect each
other. The less points with a loan, the higher the
interest rate and the more points, the lower the
interest rate. So, it may make sense to take a
higher rate (with less points) if you want to reduce
the amount needed at closing.

2) When comparing lenders, be sure to compare their
fees as well as interest rates and points. These
fees can add up at closing time.

3) Since homeowners insurance is paid up front
(generally for at least 1 year) shopping for the
best deal can save money.

4) Closing Agent and Attorney fees can vary, so you
will want to make comparisons of their charges.

In Summary

Although you don't have an option of whether or not to
pay closing costs (for certain, at least some WILL be
on your closing statement!) you can, with some
preparation, minimize the impact.

Resources:

Good Faith Estimate

Making Mortgage Choices

Closing and Settlement

Saving on Homeowners Insurance

++++++++++++++++++++++++++++++++++++++++++++++

As always, if you have suggestions for improving the
site, or topics you would like to see addressed in
this newsletter (or, if you have used the Home Buyer's
Information Center to successfully purchase a home),
drop us a
quick line.
or access our
feedback page

A special thanks to all those who have written to let us know
that they have found the Home Buyer's Information Center a
helpful resource in their buying process.

Have a great month!

The Team at the Home Buyer's Information Center

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