Delaware Budgeting: Your Home is Our Piggybank

Prior to this past Sunday, Delaware was the state that charged the highest property transfer tax in the country.  Customarily 3%, split between buyer and seller, with half the money going to the state and half to the local county in which a property was sold.  After Sunday, Delaware is the state with the highest property transfer tax in the country, by a much larger margin.

Mason Mac specializes in Delaware home loans
Newark, DE, home to the University of DE and one of the best small towns in New Castle County

Thanks to a failure to pass a state budget by the deadline of June 30, a midnight deal on the Sunday of a holiday weekend was struck, increasing the state property transfer tax on real estate transactions up a full 1%.  Also included in the measure were increased SIN taxes (those on alcohol and tobacco products).

So a few cents more for your smokes, a few cents more for your booze, and thousands of dollars more in fees if you plan to buy or sell a home in the 1st state.

On a $300,000 home sale, the result is an extra $1,500 out of pocket for buyers and an extra $1,500 out of pocket for sellers.  It doesn’t take a partisan point of view to consider this a terrible move by the state and it’s “leadership”.  At a time when home ownership rates in the United States are their lowest since the 60’s, and would-be buyers struggle to enter the market largely due to the associated costs, this move by Delaware is a pathetic way to address budget issues.

More and more states and federal governments are looking to the housing market to compensate for decades worth of fiscally irresponsible practices, so it’s important for people to take this into consideration come election time.  Home ownership has historically been one of the biggest and best steps for individuals to achieve financial wealth, but through actions like this one taken by Delaware and not long ago the federal money grab through conventional mortgage “g fees” one of the best financial moves an individual can make is under attack from politicians on both sides of the aisle.

Buying and owning a home is a huge piece of the American Dream, and at Mason Mac we’re helping people achieve that dream every day – while we always educate our clients and partners on the mortgage world, it’s important to know when things like this happen, too.  We have clients, business partners, and tons of friends in Delaware, and we hate to see their homes and home ownership dreams treated like a piggybank by the people in charge.  We hope our Delaware friends don’t see any further increased costs going forward, and that you’ll all remember this 4th of July surprise when election time rolls around.

 

HOLY TRID! New Regulations for the Mortgage Industry Start Today!

Today marks the 1st day of new federally mandated regulations known as “TRID” (TILA-RESPA Integrated Disclosures). The Consumer Financial Protection Bureau (CFPB) has introduced these new regulations as part of their “Know Before You Owe” initiative.

New forms are part of TRID whose purpose is to help make it easier for borrowers to understand complex mortgage documentation. Home mortgages are important for consumers so that they can achieve the dream of homeownership. As much as we try to make the mortgage process less complex for our clients it is still not as simple as we all would like. These new TRID forms look to help with the complexity by merging four forms into two forms.

The New Forms

During the mortgage process, we as the mortgage lender are required to give you these two new forms. One form, the Loan Estimate, you will receive early in the process. The second form, the Closing Disclosure, you will receive later on so you can review the final loan terms before you close.

The Loan Estimate

The Loan Estimate replaces both the initial Truth-in-Lending (TIL) statement and the Good Faith Estimate (GFE).

Within 3 business days after receiving certain information on your loan application (income, property value, etc.) you will be sent a Loan Estimate.

Your Loan Estimate (LE) consists of three pages. The first page lists general information about your loan:

Applicant info and property details
Loan type, purpose and terms
Projected payments during the loan term
Estimated closing costs and how much cash you’ll need at closing

The second page of the Loan Estimate breaks down the closing costs:

Origination Charges (this covers our expenses to do the loan)
Other Costs (third-party charges like homeowners insurance)
Calculation used to determine estimated cash required at closing
Adjustable interest rate table, payment table (for ARM loans only)

The last page shows information about your lender and further details to help you choose which loan is right for you:

Contact info for us “the lender” and your loan originator
Comparisons (consistent table format to make comparing different loans easy)
Other Considerations (details specific to this loan from this lender)
When you’ve decided on your loan option, you MUST sign the Intent to Proceed document. Without this consent, we as your lender cannot move forward with processing your loan.

Closing Disclosure

The new Closing Disclosure replaces both the final Truth-in-Lending disclosure and the HUD-1 statement.

When your loan has been processed and is ready to close, you will have a final discussion with us to go over the loan and its terms. We want to make sure you understand and agree to everything. We will then provide you a Closing Disclosure detailing your loan terms.

The Closing Disclosure is designed to be easy to read and contains the same information as the Loan Estimate essentially. It will reflect your final fees, charges and includes additional information relating to your escrow account (which holds funds to pay your taxes & insurance(, if applicable. You need to review and confirm everything matches what you have agreed to.

The New 3-Day Waiting Period

We as your lender are required to give you a minimum of three business days to review the Closing Disclosure before your closing can take place. If changes to the Closing Disclosure are made, another three-day review period may be required.

To prevent a delay in the closing of your loan, it is important to acknowledge receipt of the Closing Disclosure as soon as you receive it.

Here at Mason-McDuffie Mortgage we have been working hard to make sure our clients have a seamless transaction with these new regulations. If you have any questions about the new regulations or forms, please contact your Loan Originator, or you can email us at info@mmcdcorp.com.

The Impact of the Government Shutdown on the Mortgage Process

Though the media and both political parties would like you to believe that there will be no immediate impact on American businesses, that isn’t exactly true for the Mortgage industry.

Here at Mason-McDuffie Mortgage we want to make sure that everyone understand exactly what the impact will be if you are currently in process for a Mortgage Loan or starting out the Loan Application process.

The Immediate Impact
:

Mortgage Lenders need to verify Social Security Numbers for all borrowers. Currently this is not possible due to the shutdown.

All loans that are in need of tax transcripts to continue processing or get final approval of your loans will be delayed until the shutdown is over.

The shutdown has caused the USDA offices to close.  This means that existing loans that have been submitted to USDA for review will be delayed until their offices reopen. This also means that Rural Housing’s GUS approval system will be unavailable. Finally, Rural Housing will not issue Loan Note Guarantees or issue any new commitments during this time.

HUD/FHA/VA should continue somewhat normally provided that the shutdown does not drag on too long. There will be some reduced functionality and possible delays due to limitations in staff.

Borrowers that have been furloughed and whose employment is directly affected by the Government shutdown can expect delays in processing and/or closing of their loans.

According to the MBA, “A shutdown lasting a few days would slightly inconvenience lenders in processing loans, however a longer delay would have more serious impacts. Purchase loan volume could shrink and impede the recovery of the housing market. Additionally, long-term furloughs may disrupt time-sensitive mortgage transaction deals by interfering with borrower lock agreements and causing interest rate disparities from the time of closing to the time the loan is securitized.”

You can read a detailed analysis of the government shutdown on the mortgage industry by following this link here.

We will keep our customers and business partners informed with any updates. We all hope that the Government Shutdown will be short lived and will be brought to a resolution soon.

– Mason-McDuffie Mortgage

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