New reports from Bankrate.com show that closing costs have increased and interest rates are slightly up. According to Bankrate, closing costs have seen a 36.6 percent increase and rates a 0.06 percent increase. The report shows that fees charged directly by the lender rose 22.8 percent. Fees charged by third parties, for title and appraisals rose even higher.
Bankrate.com attributes the rise to the new good faith estimate which was created to lower borrowers’ costs and provide the borrower with an accurate cost on the good faith estimate. Confused yet? Lenders are now penalized if they undervalue the cost. The news in Florida isn’t as bad as around the country. Closing cost on a $200,000 home sale averaged $3,369 here, up just $381.00. Florida actually drops in the ranks from being the third most expensive state in the country to the 12th.
Bankrate also reports that lenders’ costs have risen since they have had to allocate more time and labor to examine every loan application. This is due to the new regulations that were implemented in January 2010. When providing a good faith estimate, lenders must now be within 10 percent of the original good faith estimate at time of closing. It is also worth noting that the new good faith estimate does not even provide the borrower with the monthly mortgage payment. The buyers haven’t a clue what their mortgage payments will be. It used to be on the old good faith estimate but now it’s gone.
The mortgage banker’s association is lobbing to have the amount a seller can credit a buyer at closing from 3 percent to 4 percent on a conventional mortgage. This would help the buyer cover the increase in cost associated with the new mortgage. With closing costs increasing and mortgage rates slightly up, this may still be a good time to buy a home. Rates are at a 50-year low and there is a huge inventory of lower priced homes.
If your credit is not perfect, there are lenders out there willing to work with you, especially if you don’t have any major issues like repossessions or IRS liens.
If you are on the road to repairing your credit, you may consider the rent-to-own option. Some lenders are eager to get someone in their homes so they offer that option. You can also work through the Department of Housing and Urban Development, which offers programs to help low-income families buy a home.
Karen Blondin, owner of Blondin Mortgage, can be reached at (941) 376-2051.