We’ve already talked, in general terms, about what can be included in closing costs, so now we’re going to start a series of posts talking about those costs individually, starting off with attorney fees.

Either or both parties can pay these and the fee is typically for the lawyers to prepare and record official documents. There can be more than one attorney as each person/party/principal involved can have their own attorney present This fee is most commonly see in commercial lending situations to ensure the documents are prepared correctly.

Some highlights from yesteday’s Federal Open Market Committee meeting: 

• “ Information received since the March meeting indicates that the economic recovery is proceeding at a moderate pace and overall conditions in the labor market are gradually improving.” 
• More importantly to those in the market for a mortgage (either to purchase a home or to refinance), the Committee decided to maintain its existing policy of reinvesting principal payments from its securities holdings and will complete purchases of $600 billion of longer-term Treasury securities by the end of the quarter. 
• The Committee will maintain the target range for the federal funds rate at 0 to 1/4 percent and continue to anticipate that economic conditions…are likely to warrant exceptionally low levels for the federal funds rate for an extended period.

As CapCenter evaluated the impact of these statements on the bond market, we determined that as of Thursday morning, April 28, we could could lower our rates just a tad.  This is great news for those who are in the process of refinancing or purchasing or selling a home.  Historically low rates are still available — but they won’t be around forever!

Many people are asking about private mortgage insurance due to concerns about the current market value of their homes.  Here are some important facts for you to know:

• If you put less than 20% down on a home loan, your lender will require Private Mortgage Insurance (PMI).  PMI protects the lender if you default on the loan.
• The Homeowners Protection Act of 1998 establishes rules for automatic termination and borrower-requested cancellation of PMI.
  • PMI must be terminated automatically when you reach 22% equity in your home based on the original property value IF your mortgage payments are current.
  • You may request the cancellation of PMI when you reach 20% equity in your home if your payments are current.
  • Borrowers must be told at closing and reminded once a year about PMI termination and cancellation.
• For many borrowers, PMI is tax deductible through 2011.  Here’s how it works:
  • Borrowers with adjusted gross incomes up to $100,000 may be able to deduct 100% of their 2011 premiums.
  • Deductions are phased out in 10% increments for borr0wers with adjusted gross incomes between $100,001 and $109,000.*

With rates STILL at (almost) historic lows, it might make sense to refinance even if PMI is required on your new loan.  Remember - it doesn’t stay on the loan for the entire loan term, but a lower interest rate will benefit you over the life of the entire loan.  Check with a CapCenter Loan Consultant to learn more.

* Borrowers should consult their tax advisers for applicability of this deduction to their specific circumstances.

People are constantly making mistakes when it comes to home financing.  Whether it’s a refinance or a home purchase, there are certain precautions to take to make sure you end up with the best loan product for your situation.  It is similar to the instinctive process of finding a mate. 

It’s far too common for people to look at one rate, one term, and pull the trigger.  Shop around!  You don’t talk about kids and a white picket fence on a first date.  Why?  Because you do your research, and make sure she (or he) is the right one.  Sure, she might seem perfect.  But when you meet all eleven of her cats, you will most likely begin searching elsewhere.  Mortgages vary just as much as people, so be sure to look as many places as possible for the best rate/term package for you.

Be sure to check your credit score BEFORE you apply for a loan.  Have you ever walked into a first date without rehearsing at least a few of the inevitable questions? Of course not – because you want to seem eloquent.  You want to know yourself.  Before applying for a mortgage, you need to know where you stand and the products that will be made available to you.   Check out AnnualCreditReport.com for a free lesson in your credit history (and E-harmony.com for an expensive lesson in who you’re compatible with).

Another common error is falling in “love” with a house and signing up for payments you can’t afford.  Your monetary position dictates where you live, not vice versa.  We all want to date that tall blonde, but her infatuation with Italian leather and German sports cars limit those who actually can.  Having easily affordable house payments will keep you from worrying down the road (and, God forbid, foreclosing).  Getting a pre-approval letter from a lender like CapCenter will help you avoid this dating (and lending) pitfall.

Finally, be sure to get a written offer from your lender.  While you can be sure an offer from CapCenter is accurate and above board, you never want to be assaulted by a pack of nasty surprises at the closing table.  Like an air-tight prenuptial agreement, you want to know what‘s being promised is what you’re getting.    You should never be caught off guard by your mortgage lender, either.  

In sum, you know you won’t get seriously involved with someone without doing your due diligence.  Getting to know their personality.  Learning about their passions.  Analyzing their facebook account.  Whether it’s for a refinance or a home purchase, the same amount of care and precaution needs to go in to finding a mortgage.

Greetings! Welcome to the CapCenter blog.   

This blog is dedicated to two things – keeping our customers happy, and helping celebrate the joy of homeownership.  Because we know how stressful home loans can be, we work hard with our clients to get them to closing as quickly and stress-free as possible.  On top of that, we pay ALL of your closing costs.  So whether you’re purchasing or refinancing, CapCenter will not only keep you happy with great rates and hassle-free lending, but you will save big bucks on your closing costs. 

When someone purchases a new home, or refinances a current property, it is cause for celebration.  This blog is dedicated to just that. This will be a forum not only for home mortgages, but for all things related to homeownership.  We want to focus on gardening, do-it-yourself fixes, going green around the house, even hosting great house parties.  Please send us material, too!  We would love to hear your thoughts – tips we may have left out, past lending experiences, or stories of why you love your home.  Also, we are always looking for new ways to help our customers.  If you have suggestions or feedback for our consultants, please feel free to post them here!

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Thanks for reading.  We hope you enjoy.

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