Changes in lending regulations combined with no-cost loans and fewer all-cash home buyers benefit Southern Nevadans in the market to buy a home.
Many homes buyers have lowered their out-of-pocket mortgage costs, thanks to the new Consumer Finance Protection Bureau’s mortgage regulations that took effect in January 2014, which brought into the market true ‘no fee’ mortgage programs. The ‘3 percent cap rule’ placed a limit on the upfront fees charged by lenders to no more than 3 percent of the mortgage balance. This has reduced the cash that homebuyers must bring to the table in order to close on their home purchase.
Home buyers who “shop around” for their mortgage have discovered even more savings, especially those who have turned to Mortgage Brokers who offer multiple mortgage programs from different banks and lenders.
Mortgage Brokers can oftentimes help you uncover the best deal because they work with a variety of lenders and must offer borrowers the lowest possible interest rate and fees for which they qualify. All Mortgage Lenders are now federally regulated in what they can charge borrowers in total “disclosed” fees, but mortgage banks, through the use of secondary market mark-ups can increase your rates and associated fees without a limit. Due to this new cap rule, you can typically find the rates from a Mortgage Broker anywhere from .125% – .50% lower in “Interest rate” than many banks or mortgage bankers. And with no fees, the costs can range anywhere from $1,000 to as much as $7000 less.
Southern Nevadans who are looking to save out-of-pockets costs of a new mortgage or in refinancing their current one will be impressed by the new ‘no fee’ mortgage program. Through this program, you’ll still have to pay the typical buyer non-mortgage closing costs which are the same regardless of the lender, like sales tax based on the home’s purchase price, recording fees and a home inspection. However, this program can help buyers save literally thousands of dollars because you avoid the fees that most lenders charge borrowers, such as a loan origination fee or a processing fee, etc. Mortgage Brokers now get paid by the lender, and charge nothing to the buyer.
In order to compare the actual cost of mortgages, advise your clients to compare the APR or the “annual percentage rate” rather than the interest rate because the APR incorporates these various fees. The APR will quickly identify which loan is the better value!
No matter where you obtain your home mortgage, the first step in finding the “best mortgage deal” is to participate in a prequalification process with a full-service lender. Becoming prequalified for a mortgage not only helps you understand your mortgage options and how expensive of a home that you may buy. It also gives you an edge in our valley’s competitive real estate market.
Now is really a great time to buy a home in the Las Vegas Valley because our housing market has stabilized and many of the investors and home flippers have moved on with their all-cash offers. A recent Greater Las Vegas Association of Realtors report showed all-cash sales were around 32 percent in November, a tremendous decline from February 2013 when over 59 percent were cash sales.
This is great news to those who want to buy a home to live in and, like most typical people, need a mortgage to do so. Having a mortgage prequalification letter in hand is essential because it shows the seller that you have done your research, you know your purchase power, and that you’re serious about buying their home.”