Realtor Fees for the Home Buyer

The Realtors are only paid upon the sale of a home. That means that all the houses you want to see, they will show you. On weekends, evenings, whenever you call them to go out and look. That is why it is very important that only serious Buyers contact Realtors. Look at it this way, would you want to take time away from your family if it isn't warranted?

On the other hand, the Seller usually picks up the bill for all realtor fee's. The Seller typically pays 3% for their realtor to list and show their home, then another 3% for the Buyer's realtor.

The exchanging of money only happens at the closing table. So if it takes you 1 or 2 months to find the house of your dreams, the Realtor is using their money for gas to drive you around and eating out. A normal purchase takes approximately 30 days to complete. So for 30 days your Realtor is working their booties off for you!

Earnest Money When Seller Refuses to Make Repairs

The answer depends on the terms of the sales contract.  Typically, the buyer places an earnest money deposit and in some instances, the contract contains a home inspection contingency.  The buyer then has a specific period of time to get the home inspepcted and notify the seller if there are any repairs needed.  The seller can do one of three things, under the standard form of sales contract:

1. He can fix the items requested by the buyer.

2. He can fix some of the items, and not others.

3. He can refuse to do any of the repairs.

At this point, the buyer must decide if he wants to go through with the purchase. If the seller fixes everything, the buyer must proceed or his earnest money is at risk. If the seller chooses #2 or #3, it's up to the buyer to decide whether to proceed with the contract, re-negotiate it, or cancel it. If the buyer cancels the purchase because of necessary repairs that the seller won't fix, the buyer would get his earnest money back IF THERE IS A HOME INSPECTION CONTINGENCY in the contract.  If there is no home inspection contingency, the seller is under no obligation to do anything.

Skipton re-enters buy-to-let mortgage market

Building society Skipton has announced that is to once again offer buy-to-let mortgage products following a temporary withdrawal from the market.

Skipton ceased buy-to-let mortgage lending in 2009 due to uncertainties in the market, but says increased demand means it will now begin offering such products once again.

Its buy-to-let portfolio will include a two-year fixed rate mortgage at a rate of 4.49 per cent and a three-year fixed rate deal at 5.49 per cent, both with a loan-to-value ratio of up to 60 per cent.

Kris Brewster, Skipton's head of products, said: "With evidence that the housing market is beginning to stabilise, albeit with the potential for further limited house price falls later this year, we believe it's now appropriate to make a controlled, low risk return to this space.

"Therefore, we have decided to offer a set of straightforward and competitive products."

The news follows a recent survey by The Mortgage Works, which found that the majority of brokers predict activity in the buy-to-let mortgage market is set to increase, with 51 per cent expecting the number of new landlords to rise in 2011.

659,000 households struggling with mortgage payments

Thousands of homeowners are struggling to pay their mortgages as pay falls in real terms, a new study reveals.

According to a report by the Centre for Economics and Business Research and the Institute of Social and Economic Research for the BBC?s Panorama programme, rising inflation coupled with stagnating salaries means that the average worker now takes home ?1,088 less a year than they did just two years ago.

This represents a five per cent pay cut, in real terms, on what they were earning at the beginning of 2009 - in the middle of the recession .

The study found that 659,000 households are already struggling to meet mortgage payments, with 117,000 in arrears .

Furthermore, if the Bank of England decides to increase the base rate of interest by one percentage point, a further 36,000 households will find it difficult to make mortgage payments .

It comes the same week as a study by MGM Advantage, which calculates that rising inflation means UK households need to find an extra ?1,496 a year on average more than they did 12 months ago to maintain their standard of living.

Northern Rock cuts mortgage interest rates

A number of rate reductions have been made by Northern Rock to its Everyday range of mortgages .

The cuts affect a number of two and three-year fixed rate deals and will help those with deposits ranging from ten to 30 per cent.

Northern Rock's two-year deal at a 90 per cent loan-to-value (LTV) ratio now comes at a rate of 5.88 per cent, with no product fee to pay.

Those with a bigger deposit can now benefit from a 3.39 per cent rate on a 70 per cent LTV mortgage, with a ?995 product fee, also on a two-year deal, while a remortgage on the same terms is now at 3.48 per cent.

Finally, Northern Rock has reduced its three-year 70 per cent LTV mortgage to 3.94 per cent, with a ?995 fee.

It follows recent comments by David Hollingworth of mortgage brokers London and Country, who told the Telegraph that many mortgage lenders are increasing their fees for their most competitive mortgage deals, as customers look to switch to a fixed-rate loan over fears of future interest rate rises.

Mortgage costs expected to rise with market in a “swirl”

Last year, many mortgage market analysts didn’t think mortgage rates could go any lower. After reaching 50-plus-year lows, the expectation was for mortgage rates to consistently trend upwards (where else could they go?). Yet with moderate economic improvement over the last few months, and most recently, several tumultuous global events (Japan disasters, unrest in the Middle East and Africa), mortgage rates have found little upward momentum.

However, outside of current mortgage rates, the mortgage market is in the midst of a regulatory whirlwind that has the market in a “swirl.” HSH.com’s VP Keith Gumbinger shares nine issues “which all contribute to the uncertainty in the market and are a deterrent to improving lending conditions, reducing costs or to making the mortgage market a less-messy landscape.”

Let’s take a look at a few of the issues, and keep in mind how they’re going to impact your bottom line (emphasis added):

1. Risk-based pricing adjustments

As far as cost increases go, both Fannie Mae and Freddie Mac increased their “Loan Level Pricing Adjustments” (LLPA; Fannie) and their “Post-Settlement Closing Fees” (Freddie). Applied at the intersection of your credit score and the amount of equity or down payment you have, these increase the cost to the consumer to help Fannie and Freddie offset the risks of making loans to lower credit or equity borrowers. However, for the first time this spring, these apply not just to risky borrowers, but even to those with stellar credit and fairly deep equity stakes. Basically, costs have risen for all borrowers.

2. FHA insurance cost increases

Not the same as the LLPAs above, the FHA — which recently changed its insurance premium structures to lower initial costs in favor of higher recurring (annual) costs — has decided to add another 0.25 percent increase to its annual mortgage insurance premium. This adds an additional $250 to the annual cost for a $100,000 loan in the first year. It’s not a huge increase, but no additional cost increases are welcome in this housing market.

5. Dodd-Frank and QRM 

As far as we know, QRM isn’t a radio station anywhere, but rather a vague concept which may come to dominate the mortgage securities industry. The Qualified Residential Mortgage (QRM) will eventually be the “standard” mortgage structure, as it will be the mortgage(s) which won’t require loan sellers to retain as much as 5 percent of the value of the loans sold into securitization. At present, and while the definition isn’t set just yet, this is likely to be a conforming 30-year fixed-rate mortgage with a high credit score and down payment requirement (possibly at least 20 percent down). All other loans being sold or packaged into securities will require the firm(s) who securitizes the loan to hold back a pile of cash against possible loss, called “skin in the game.” Five percent of hundreds of billions of dollars adds up to a lot of money that needs to be held back, which reduces funds available to lend… and the institution of such a standard will make loans outside any narrow definition more scarce and expensive.

8. CFPB

Coming soon to a mortgage market near you will be a bureaucracy with sweeping regulatory authority. How the new agency will change the mortgage and consumer-lending markets will remain unclear for some time, but borrowers should start to familiarize themselves with a concept that lenders have been aware of for some time: regulatory risk. Regulatory risk is a part of any regulated business model and has impacts (in this case) on the availability and the price of credit. A climate of stable regulations can become well-modeled with known costs and implications, but an unclear or stormy one is hard to plan for or quantify. In such a situation, “erring on the side of caution” becomes the order of the day, with potential effects on the price of credit tending toward the high side until the true costs of conducting business are known. In a worst case scenario, a lender may simply decide to pull away from lending at all until at least some clarity returns. If nothing else, the initial expected focus of the new bureau on mortgage disclosure reform will likely drive up the cost of making new loans to some additional degree.

“This spring (and beyond), everything from front-end originator compensation to back-end loan failure management (and everything in between, it seems) is in this regulatory swirl at the moment,” said Gumbinger. “Homebuyers and homeowners are left to navigate this mess as they search for credit to buy and refinance homes this year. Here’s wishing them ‘Good luck!’”

Mortgage Market Weekly Recap (03/28/11-04/02/11)

April 3rd, 2011 by Tim Manni

Saturday

“What if the mortgage interest deduction was eliminated?“

What would your reaction be if lawmakers decided to do away with the mortgage interest deduction? For certain homeowners, tax season, along with all the usual stress it brings, means the opportunity to deduct some of the interest they paid on their mortgages all year long. However, there have been some discussions, both on Capitol Hill and beyond, of doing away with the famed mortgage interest deduction as a way to correct this country’s ever-growing deficit.

As you might anticipate, many homeowners and professionals are up in arms over the idea, while others think eliminating the deduction could be a reasonable solution.

To get a sense of the differing opinions that are out there, we reached out to four experts in the field and asked them to offer their thoughts on the future of the mortgage interest deduction. Here’s just some of what they had to say…

Friday

“Changes to the mortgage market beginning today (April 1, 2011)”

With the current mortgage market in such a state of transition and change, it’s hard to keep track of all the different regulatory changes, let alone when they are slated to begin. Today, April 1, 2011, two changes to the mortgage market are officially underway: The banning of yield spread premiums (YSPs) and changes to Fannie and Freddie’s risk-based pricing adjustments.

If that sounds like a mouthful of technical terms and industry mumbo-jumbo, you’re not alone. However, this mortgage industry jargon is expected to shape the future landscape of the mortgage market and is highly-anticipated to affect your mortgage experience and increase costs…

Thursday

“Here’s one way to increase home prices!”

Apparently, four states have proposed a way to help inflate home prices or at least attempt to keep them from falling further. The problem with this proposed solution is that, for one, it may be illegal.

Syndicated columnist and HSH blogger Peter Miller introduced me to this concept on his own blog earlier today…

Wednesday

“QRM still a long way off, but many fearing its impact already”

Yesterday, several federal entities released a 233-page document which proposed a definition for what a “qualified residential mortgage” should consist of and then opened it up to comment. By no means is this document a concrete outline of what the QRM will eventually look like. The agencies are seeking comments and inputs on a host of mortgage-market issues — everything from asset-backed securities to risk retention. All told, the massive document contains some 174 questions that the Fed is seeking input on concerning the makeup of this QRM (should it include higher LTVs or higher debt ratios; should the influence of MI apply, etc.)…

Tuesday

“Housing: Concerns of a double-dip mounting”

Almost two years ago I wrote a post titled “Home prices: The statistic that matters most?” It was June 2009 and we were at a point where home prices had fallen every month since July 2006. Everyone seemed well aware of just how instrumental home-price recovery would be in leading us out of the recession and back towards recovery and regrowth. “The [economic] crisis cannot end fully until home prices in the U.S. are at least stabilizing,” said Alan Greenspan.

Well, it’s two years later and not only has the economy not fully recovered, but home prices at the start of 2011 are trending dangerously close to their 2009 trough. So even if you don’t agree that home prices may be the statistic that matters most, it’s certainly an indicator of this country’s overall economic health….

Monday

“Mortgage rates steady; do consumers even care?”

At some point down the line when we look back over the last year or so, I believe the resounding (cynical) memory will be that, for the most part, this era of historically-low mortgage rates was wasted on a potential pool of homebuyers and refinancers that either a) didn’t take advantage; or b) couldn’t take advantage of the lowest mortgage rates in decades.

With the mortgage market stuck in a swirl, credit conditions as strict as they are, and economic recovery being as unstable as it is, I wonder if consumers even care all that much about current mortgage rates…

Mortgage rates steady; do consumers even care?

At some point down the line when we look back over the last year or so, I believe the resounding (cynical) memory will be that, for the most part, this era of historically-low mortgage rates was wasted on a potential pool of homebuyers and refinancers that either a) didn’t take advantage; or b) couldn’t take advantage of the lowest mortgage rates in decades.

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With the mortgage market stuck in a swirl, credit conditions as strict as they are, and economic recovery being as unstable as it is, I wonder if consumers even care all that much about current mortgage rates:

HSH.com’s overall mortgage tracker — our weekly Fixed-Rate Mortgage Indicator (FRMI) — found that the overall average rate for 30-year fixed-rate mortgages rose by three basis points (.03%) to finish the week at 5.11%. A key component of the first-time homebuyer market, FHA-backed 30-year fixed-rate mortgages increased by four basis points to land at 4.76%. ARMs are starting regain at least some favor in the market, and Hybrid 5/1 ARMs, perhaps the most preferred alternative to the traditional 30-year FRM (notably for jumbo buyers) bounced just two hundredths of a percentage point higher (.02%), ending the final week of March at an average of 3.74%.

While granted that February was a month of brutal winter weather and uneven economic recovery, mortgage rates did firm some and potential homebuyers reacted by stepping back. Existing home sales, which represent the largest portion of the marketplace, declined appreciably last month:

Sales of existing homes, the largest portion of the market, declined by 9.6% during the month, sliding to an annualized rate of 4.88 million, the softest pace since last November. With the falloff in sales, and with plenty of inventory still coming into the market from foreclosures and such, there are now 8.6 months of supply available at the present rate of sale, up from a closer-to-normal 7.5 months in February.

What if the mortgage interest deduction was eliminated?

What would your reaction be if lawmakers decided to do away with the mortgage interest deduction? For certain homeowners, tax season, along with all the usual stress it brings, means the opportunity to deduct some of the interest they paid on their mortgages all year long. However, there have been some discussions, both on Capitol Hill and beyond, of doing away with the famed mortgage interest deduction as a way to correct this country’s ever-growing deficit.

As you might anticipate, many homeowners and professionals are up in arms over the idea, while others think eliminating the deduction could be a reasonable solution.

To get a sense of the differing opinions that are out there, we reached out to four experts in the field and asked them to offer their thoughts on the future of the mortgage interest deduction. Here’s just some of what they had to say:

Alan Viard is an economist at the American Enterprise Institute for Public Policy Research:

A cold-turkey end to the mortgage interest deduction would send housing prices downward.

Ultimately, there are two factors to consider: the value of existing houses and the quantity of resources devoted to housing. If the deduction was eliminated, you’d see fewer resources going into housing and more into housing investments. It would be more efficient.

Government should encourage homeownership, but mortgage interest deductions aren’t an effective way.

Danielle Hale is a research economist at the National Association of Realtors

Homeowners would see their home values decline 15 percent on average if the deduction was cut. Higher-value areas would feel the most effect. Many homeowners have significant parts of their net worth tied up in their homes. So, that’s a problem.

The 75 percent of homeowners who have mortgages use the deduction. It’s vital to the mortgage industry and the economy. All sorts of research ties homeownership to additional benefits too. For example, homeowners vote more often and engage in civic groups.

Polina Vlasenko is a research fellow at the American Institute for Economic Research

If the deduction goes away, the housing market will be hurt. There will be lower demand and lower home prices. It won’t have a big effect, though, since nobody buys a home just for a tax deduction.

But removing it is difficult, and there might be an initial shock effect. People will pay more taxes and have less income left over for spending. And the economy isn’t recovering that much. There may be a better time to do this.

Changes to the mortgage market beginning today (April 1, 2011)

April 1st, 2011 by Tim Manni

With the current mortgage market in such a state of transition and change, it’s hard to keep track of all the different regulatory changes, let alone when they are slated to begin. Today, April 1, 2011, two changes to the mortgage market are officially underway: The banning of yield spread premiums (YSPs) and changes to Fannie and Freddie’s risk-based pricing adjustments.

If that sounds like a mouthful of technical terms and industry mumbo-jumbo, you’re not alone. However, this mortgage industry jargon is expected to shape the future landscape of the mortgage market and is highly-anticipated to affect your mortgage experience and increase costs.

Yield spread premiums (YSPs)

First off, what is a YSP? A YSP, is “perhaps the primary mechanism by which mortgage brokers make enough money to stay in business,” explains HSH.com’s VP Keith Gumbinger. Beginning today, the Fed has banned mortgage brokers from making any additional compensation solely based on increasing the interest rate on a customer’s mortgage loan.

“‘Excessive YSPs’ have been a topic of regulatory discussion for years and have even been implicated as a contributing factor in the mortgage market meltdown,” writes Gumbinger. “Yet brokers contend that there’s little proof that borrowers were injured by the normal use of the practice and that the Fed is over-reaching.”

How does this ban affect you?

“The banning of the markup on a loan’s interest rate is by no means music to anyone’s ears, since it does threaten to put many brokers out of business, thus making it harder for borrowers to find or obtain funding (especially those outside of mainstream mortgage requirements).”

 Risk-based pricing adjustments

We’ve talked a lot about mortgage costs rising both now and into the future. Several of the current and upcoming regulatory changes are expected to increase costs to the consumer. The change to how both Fannie Mae and Freddie Mac are planning to offset borrower risk is no different:

As far as cost increases go, both Fannie Mae and Freddie Mac increased their “Loan Level Pricing Adjustments” (LLPA; Fannie) and their “Post-Settlement Closing Fees” (Freddie). Applied at the intersection of your credit score and the amount of equity or down payment you have, these increase the cost to the consumer to help Fannie and Freddie offset the risks of making loans to lower credit or equity borrowers.

How does this affect you?

You might be saying to yourself, “So what, I have good credit, how will these pricing adjustments impact me?”

For the first time this spring, these price increases apply to all borrowers, even those with great credit and significant equity positions. ”Basically, costs have risen for all borrowers,” said Gumbinger.

These two changes, which officially begin today, are just the beginning of a slew of alterations to a mortgage market that’s stuck in a swirl.