On 10.2.2012, The Federal Trade Commission’s (FTC) posted a comment under housing and real estate to the U.S. Consumer Financial Protection Bureau on disclosure forms designed to help buyers needing better mortgage disclosures they receive when they apply for and close on a home mortgage loan.
Buying A Home With Better Informed Decisions: Home Destination: A Focus for Home Destination and the Federal Trade Commission.
Helping home buyers understand the features, costs, and risks of home mortgage loans to make the best informed decision before purchasing a home.
Let Home Destination help you plan for what's ahead so you have the information you need to make informed decisions about your home purchasing options.
Buying A Home Requires Understanding Features, Costs And Risks
The Federal Trade Commission’s staff submitted a comment to the U.S. Consumer Financial Protection Bureau on disclosure forms designed to help consumers understand the features, costs, and risks of home mortgage loans. The comment is in response to a CFPB Notice of Proposed Rulemaking regarding disclosures consumers receive when they apply for and close on a mortgage loan. The FTC staff comment commends the CFPB’s efforts to develop improved mortgage disclosures that are designed to help consumers make better-informed decisions about mortgages. It states that the disclosures developed by the CFPB will likely improve the information that consumers receive under current federal regulations; they are generally simpler and less technical, and should be easier to understand.
Home Destination can attest to the conclusions of the Home Buyers Survey:
• About a fifth of the consumers could not correctly identify the APR of the loan, the amount of cash due at closing, or the monthly payment.
• Nearly a quarter could not identify the amount of settlement charges.
• About a third could not identify the interest rate.
• About a third did not recognize that the loan included a large balloon payment;
• A third did not recognize that the loan amount included money borrowed to pay for settlement charges.
• Half could not correctly identify the loan amount.
• Two-thirds did not recognize that they would be charged a prepayment penalty if they refinanced with another lender.
• Three-quarters did not recognize that substantial charges for optional credit insurance were included in the loan.
• Nearly nine-tenths could not identify the total amount of up-front charges.
Features Of A Home
One of the most important factors people consider in buying a home is accessibility. Are there many steps to the home's entrance or nice wide pathways to invite guests and make your home more approachable and welcoming? Do you want accessible areas via a service entrance of the garage to a mud room / coats closet / half bath? Do you want a detached garage for security purposes? Or to be able to pull your car into the home's outlaying structure?
Another is ease of daily life flow within the existing floor layout. Consider the time spent doing laundry and how accessible the washer and dryer are. Consider how the garage opens into the home for ease of carrying in groceries and other items. If you have senior family members in the home, do they prefer more of a private area in the home that offers unique living space that they can call their own.
What It Costs To Buy A Home
Real estate buyers benefit from clear disclosures before closing on buying a new home to fully understand all the costs involved that they are responsible for. The FTC websites says, " In 2007, an FTC staff study found that then-existing mortgage disclosures failed to convey key mortgage costs and terms to many consumers, and that better disclosures could be created to help consumers make informed decisions about mortgage products."
Closing Costs Fall Into Three Basic Categories:
Charges for establishing and transferring ownership of the property.
Fees paid to state and local governments..
Costs to the borrower for gaining a mortgage.
Read more to gain help understanding buyers home closing costs.
Risks Of Home Mortgage Loans
The MBA mortgage purchase index is a strong indicator of how housing is fairing overall in our U.S economy. The purchase index is up about 8 over the last four weeks and is at the highest level since June. But even with the recent increase, the purchase index has mostly moved sideways for the last 2 1/2 years. "Slow and steady" progress has been many economist opinion of our current housing market. While buying a home has historically proven to be one of the best inn vestments citizen's make in a lifetime, there are risks associated with the pleasures and responsibilities of being a homeowner and knowing that you can afford the life time of a mortgage.
American's have more tools and metrics than ever that help homeowners stay informed and offer channels of industry data and a vast array of professional commentaries. Home Destination is always just a phone call away for clients, and highly recommends asking your professional financial advisor to review your unique circumstances and gain key insights to what risks you may need to consider.
Buyer Responsibilities When Buying A Home
A buyer's decision to purchase a home or seek to modify a home's financing, and the importance of mortgage disclosures in enabling buyers in the process of buying a home, is one of the most biggest decisions made in a life time. The FTC says,"In light of the significance of a consumer’s decision to purchase a home or seek other home financing, and the importance of mortgage disclosures in enabling consumers to evaluate the costs of the transaction, it is important to ensure that disclosures effectively enable consumers to evaluate the real costs of taking out a mortgage."
Buyers Responsibilities Include:
* Inspect the home and determine whether the home will be suitable for the buyer's use.
* The buyer should ask about any applicable governmental issues, such as building, zoning, fire, health, and safety codes.
* Pre-qualify for financing and obtain a conditional loan approval letter listing all conditions to financing from a reputable lender.
* Disclosed information that could adversely affect the buyer's ability to close escrow on the home or to complete the buyer's obligations under the mortgage terms.
Home Mortgage Disclosure Act
The Home Mortgage Disclosure Act (HMDA) was enacted by Congress in 1975 and was implemented by the Federal Reserve Board's Regulation C. On July 21, 2011, the rule-writing authority of Regulation C was transferred to the Consumer Financial Protection Bureau (CFPB). HMDA edits are divided into three types: Syntactical, Validity, and Quality and have been updated recently with 2013 edits. Download a copy below and research it's data for making fully informed homeowner decisions before buying a home. Ask Jenna Thuening, owner of Home Destination for assistance if you have questions.
CFPB Strives To Use Terms That Avoid Being Misinterpreted or Misunderstood
In light of the significance of a consumer’s decision to purchase a home or seek other home financing, and the importance of mortgage disclosures in enabling consumers to evaluate the costs of the transaction, it is important to ensure that disclosures effectively enable consumers to evaluate the real costs of taking out a mortgage. Therefore, the FTC recent comments are strident in the effort to be encouraging, supporting the CFPB as it conducts controlled quantitative testing before finalizing a rule to help ensure that the proposed disclosures effectively convey key mortgage terms to consumers and are not misinterpreted or misunderstood.
Download a copy of the revised 2013 Mortgage Disclosure Act
Download the FTC Real Estate Settlement Act and better mortgage disclosures. The comments contained in the document represent the views of the staff of the Bureau of Consumer Protection, the Bureau of Economics, and the Office of Policy Planning.
Check back for more tips on buying a home with better informed decisions. Home Destination's continues to add updated content to best serve our readers. Thank you for your interest and patronage.
Jenna Thuening, a Residential Realtor helps buyers find Twin Cities homes and buy with a quality loan.
Eden Prairie MN 55334
Jenna's home page: homedestination.com
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