April 24, 2010

The First Time Homebuyer Tax Credit is about to expire.  If you haven’t applied for a mortgage yet, you are virtually out of time.  All buyers must have committed to a “binding contract” by April 30, 2010 and the transaction must close by June 30, 2010.  If you have already been “pre-approved” but not yet secured a property I want to ask you one question.   “Have you provided income documentation to your lender yet?”  Did you give the lender W2s, paystubs, tax returns, etc?  If you have not you need to understand that you are NOT “pre-approved”.   You may have been pre-qualified but without the income docs and an authorized credit report, the lender has put you in a very compromising position.  The guidelines have changed extensively in the past year and there are many “qualifying” issues that can only be answered if you provide those documents.   Don’t wait another hour.  Get those docs to your lender and ahve them confirm that you are “income qualified” for the mortgage that you want.

This brings to mind another issue for you to understand.  Today’s guidelines state that a lender will officially begin a mortgage application when a property address is determined.  Without an address you will not have been issued an official “Good Faith Estimate of Closing Costs”.  You may have been given an itemization of estimated costs but it is NOT a binding document for the lender.  I am going to provide to you the  Official HUD Booklet  that explains how to understand the new GFE.  The lender is required to provide this to you at the time of application but that could be too late.  You absolutely need to read this document.  Save it to your desktop and read it from there as it is more than 50 pages.  If you become familiar with this booklet and compare it to the “itemization” that you should have already received, when your new GFE is issued you will be able to determine that your lender is NOT playing games with you.   You should be able to see that what you were told and what you are going to get (mortgage loan costs) are what you are expecting. 

The new GFE is very confusing and  you need to prepare for it.  A lender that wants to take advantage of you will use that confusion to their benefit and at the time of closing you will have a very disappointing and possibly very expensive experience.   That is, unless you perform your own “due diligence” and prepare yourself.  It is absolutely the only way you will be able to protect yourself and your family.

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