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Are lenders’ “junk fees” pushing the high cost of closing on a home even higher? The federal government thinks so.
The Consumer Financial Protection Bureau (CFPB) says fees need to be more transparent, understandable, and reasonable.
Why are the fees charged? Are they really “junk”? Do borrowers get a say in what they pay? Let’s take a look.
Continue reading “Consumer Financial Protection Bureau Gets Tough on Mortgage Loan Junk Fees”
Some people wish they could move, but hesitate to sell their current homes. They might be thinking:
“I’d gladly sell my home right now, if only I could shift the remaining 25 years of my 4%-interest mortgage to the next house I buy! (Oh, well.)”
“Giving up our 3% rate and getting a new mortgage at 6.9% is bumming us out. Why can’t U.S. homeowners have portable mortgage options?”
Who can blame them for wishing? Indeed, Canada, Britain, Australia and some EU countries offer portable mortgages as an option. These loans can be peeled off a borrower’s current home, and applied to the purchase of a different property.
Continue reading “Can’t Wait to Move. (If Only We Could Pack Up Our Low Mortgage Rate and Take It With Us!)”
Ever heard the term wraparound mortgage? Because this is actually a set of two mortgages for the same home, it’s more complicated than a regular mortgage. It can present special risks, and it’s less commonly seen in the world of real estate.
That said, some have used it to be able to get a home deed in their own name.
Is that considered a good idea? Maybe. And how is it done? There are two main ways: through a seller, and through a professional lender.
Let’s take a walkaround through wraparounds!
Continue reading “Wraparound Mortgages: When They’re Used and How They Can Help”
Receiving the deed to a home is a major milestone. Typically, it depends on an earlier milestone: the mortgage approval.
Apply for a mortgage, and lenders will consider your debt-to-income ratio (DTI). Why the DTI? Essentially, the lender wants to know how much of your earnings you spend, using credit. A low DTI suggests that you can comfortably make payments.
If your existing debt load is light, you’ll be able to borrow more and spend more on a home. But even if you’re not getting ready to buy a home right now, a lower debt-to-income ratio can unlock financial opportunities. This matters to every one of us.
Let’s see what goes into the ratio, and how to optimize your DTI.
Continue reading “All About DTI: How Much Debt Is Too Much If I Want to Buy a Home?”
Some people buy homes, and run vacation rental businesses through them. They might even run their businesses from afar, through apps. And they do it without having to qualify for a loan based on their incomes.
These borrowers seek out an unconventional — yet popular — form of mortgage. Lenders approve these loans based on expected future income from particular investment properties.
Let’s take a look at these loans.
Continue reading “Vacation Property Loans? What’s the Scoop?”
Sometimes a homebuyer who’s married wants to buy property as an individual. They want to be the sole buyer, with no other name on the closing papers.
How can it work? Consider the purchase money mortgage.
As Cleveland’s CrossCountry Mortgage® company explains, “if a married person wants to purchase a property without their spouse being on the loan OR on the title, they can classify the transaction as a purchase money mortgage.”
With this mortgage, the marriage partner is (a) not responsible for repaying the lender for the mortgage; and (b) not named on the deed.
Continue reading “Buying Without Your Spouse? What to Know About a Purchase Money Mortgage”
Last year, mortgage lending slowed to a crawl. So, the lending industry had some extra time on its hands. Fannie Mae and Freddie Mac took advantage of some of that extra time to go over the loans they purchased in the sizzling hot market of 2020-21. During those frenzied months, underwriters were under pressure to close high volumes of loans.
When the dust settled, Fannie and Freddie found plenty of loans whose underwriters missed some things, perhaps not thoroughly checking the borrower’s documents. These errors could lead to flawed estimates of a borrower’s risk.
With nearly $10 trillion of loans issued in the hot market, the number with defects adds up to some $25 billion. Fannie and Freddie can’t hold these bags. Their legal standards rule them out. So they send these hot potatoes back to the lenders.
Continue reading “What’s a “Scratch and Dent” Mortgage?”
Know Before You Owe is a set of mortgage guides from the Consumer Financial Protection Bureau (CFPB). It shows home loan seekers the steps they need to take to open and handle a mortgage account. It provides detailed information on interest rates, and explains how to find comparable deals on loans, too.
This makes perfect sense. Home seekers should know what they’re signing up for. And who wants “gotcha” moments or sudden clarifications once it feels (or really is) too late to back out?
So, the mortgage lender legally must give the borrower an official set of closing disclosures at least three business days prior to closing day.
Why not check it out earlier?
Continue reading “Before Applying for Your Mortgage, Get Familiar With the Official Consumer Toolkit”
At the year’s end, it’s fun to pick out the best innovations to appear during the past 12 months. What about the role of artificial intelligence in home lending?
More people might take out home equity lines of credit (HELOCs) to put their home equity to work — if only it weren’t such a drawn-out process. The typical HELOC setup takes five weeks. What if the HELOC application process could be completed in just five days? What if getting approved could be as fast as signing up for a credit card?
In 2023, two companies pooled their resources and proved it possible.
Continue reading “Owning a Home Just Got More Useful. AI Speeds Up HELOC Lending”
Ever heard someone say they got a “subject-to” offer on their home? Or maybe you or someone you know is contacted with a subject-to offer. Maybe you saw a sign saying “We buy homes!” and wondered what’s going on.
Subject-to is a little-known strategy in the world of deed transactions. It comes in many forms. But the gist of it is this. If the seller does a “subject-to” sale, a buyer agrees to take ownership without having to sign mortgage documents. The purchase is “subject to” the current loan terms. And the buyer takes over the monthly payments.
So, now you’re wondering: Is this offer a good deal or a bad deal?
Let’s take a closer look.
Continue reading “What Is “Subject-To” Home Buying? AKA: Taking Over the Mortgage Payments”