Friday, March 05, 2010

New FHA Rules To Protect Buyers

When new homebuyers go to closing to finalize the sale, many are surprised that the costs to close were more than they expected. Many figure on the amount that the Good Faith Estimate provided as the final amount. Unfortuantely that estimate is not final and just a rough idea of the final fees associated with a mortgage loan due at closing. Many times these costs increase by the time the buyer gets to the closing table without warning.

However as of January 1, here is good news for homebuyers. New federal rules adopted by the Department of Housing and Urban Development took effect. The new rules will implement a redesigned, simplified Good Faith Estimate form to help buyers avoid those closing-table surprises.

Before this new policy, lenders would provide the borrowers with the estimated fees was complicated and confusing. Under the new rules lenders will all be required to use the same form for their Good Faith Estimates – a three-page document issued by HUD.

There are also new rules that will put a cap on the increases in costs that are indicated on the Good Faith Estimate and guidelines so that fees listed on the initial estimate reflect the actual cost at settlement.