Comparing The True
Cost Of Obtaining A Home Loan
by: W. Troy Swezey
Home buyers are often confused about where to begin
in their search for a home loan. The process is usually
narrowed down to finding which institutions provide the
lowest settlement costs, but the different types of
lending institutions and the variety of lending programs
available can make the search a slow, difficult
experience.
Real estate settlement costs are fees buyers normally
pay when purchasing a home such as legal services
property insurance, mortgage loan financing and title
services. In the past, consumers would have to call each
lender, request an estimate of their settlement costs
and compare all of the results to find which lender
offered the lowest total settlement costs.
The Department of Housing and Urban Development,
however, recently revised the Real Estate Settlement
Procedures Act (RESPA) which now makes it easier for
consumers to estimate various settlement costs through
computer loan origination programs. In this manner,
consumers can access a computer listing of various
programs offered by lending institutions.
The computer search speeds the process of reviewing
various programs and allows participants to arrange
financing with the listed lender. Buyers using a
computer loan origination program may be required to pay
a fee for this service, but many buyers feel the
convenience outweighs the cost. Still, the new RESPA
changes require a real estate broker with a computer
loan origination program to inform the buyer that the
service is only an option and that non-listed lenders
may offer lower rates or fees.
The new Federal Regulations also permit real estate
brokers to offer more comprehensive services to home
buyers by allowing brokers to enter into controlled
business arrangements with other companies associated
with the home buying process. Real estate brokers were
always allowed to refer buyers to lending institutions,
title companies and escrow companies, but they were not
permitted to accept compensation from those institutions
for giving a referral. The RESPA changes now allow real
estate brokers to enter into partnerships or actually
open their own mortgage service institutions. This
allows brokers to provide virtual “one-stop
shopping” by handling the entire settlement process.
RESPA changes were made to help home buyers learn
about and obtain mortgage services more conveniently.
Since RESPA helps consumers to understand the process of
home ownership, the regulations may encourage more
potential buyers and further stimulate the real estate
market.
|
