Trains have long been the subject for famous singer song writers. “Locomotive Breath” (Jethro Tull), “Train Kept a Rolling “(Aerosmith), Marrakesh Express (Crosby Stills, Nash and Young) to name a few. There are also hundreds of movies involving trains and the railroad. Some of them depicting the romanticism of the train, others painting a different picture.  Many hard working commuters depend on the train to get to and from work every day.  For homeowners thinking about putting their homes up for sale and buyers looking to purchase a home in Easton, MA (or other cities and towns serviced along the rail line), the questions of where the rail bed is in relation to the home and is the train coming to town are always asked. These questions stir many different opinions.  Discussions of reviving train service in Easton, MA have been brewing for many years with the MBTA’s desire to expand train service to the South Coast. Two recent articles, one from the Boston Globe and the other from the Brockton Enterprise, seem to indicate the prospect of the train rolling through Easton, MA is looking less likely to occur. The articles can be found at:

http://www.enterprisenews.com/business/x1659497237/South-Coast-expansion-on-track-despite-withering-MBTA-review

and

http://www.boston.com/news/local/massachusetts/articles/2010/01/07/south_station_rail_deal_collapses/. 

We invite you to check out these articles and see what you think!

GoodwinRealtyGroup.com

Closing costs are formally itemized on a HUD* settlement form nationally known as the “closing settlement” form.  There are two sides of this form, one for the buyer and the other side for the seller.  The numbers are reconciled by a closing company and in Massachusetts generally by the bank’s attorney. 

These are the most common items that a Seller will see:

              1.       attorney fee for deed preparation

              2.       attorney fee for document review and closing process

              3.       real estate professional fee

              4.       mortgage discharge fee (per mortgage)

              5.       adjustment of real estate taxes

              6.       adjustment of water, sewer, trash, fuel, HOA fees

              7.       deed stamp taxes (In Massachusetts $4.56/mil)

              8.       wire fee or Federal Express charge for mortgage payoff

The above costs are paid by the Seller.  In some cases, the Buyer has negotiated that the Seller pay some or all of the Buyer’s closing costs.  This negotiated agreement is between buyer and seller and will be outlined in the Purchase and Sales Agreement.  In these cases, you will see costs that are typically paid by the Buyer reflected on the Seller’s side of the settlement form.  There are limitations and restrictions to the amounts paid by the Seller on behalf of the Buyer.  The closing attorney should be fully aware of those limitations and will also be able to fully explain questions you may have regarding closing costs.  This  HUD Settlement Form should be kept in a handy spot as some costs may be tax deductible.

*US Dept of Housing and Urban Development

GoodwinRealtyGroup

Closing costs are generally presented to a buyer in the form of a “good faith” estimate.  This is provided by a lender or lender’s representative at the time a mortgage loan application is taken.  The estimated costs and actual costs may be slightly different but any significant variation is cause for concern and might result in a delayed closing.

Closing costs are formally itemized on a HUD* settlement form nationally known as the “closing settlement” form.  There are two sides of this form, one for the Buyer and the other side for the Seller.  The numbers are reconciled by a closing company and in Massachusetts generally by the bank’s attorney. 

These are the most common items that a Buyer will see:

              1.       loan origination fee

              2.       appraisal fee

              3.       credit report

              4.       survey report

              5.       mortgage insurance (escrow)

              6.       mortgage insurance premium (escrow)

              7.       hazard insurance (escrow)

              8.       real estate taxes (escrow)

              9.       title examination

            10.       attorney fees

            11.       title insurance (lender and/or owner policy)

            12.       recording fee

            13.       Municipal Lien Certificate recording

            14.       adjustment of real estate taxes

            15        adjustment of water, sewer, trash, fuel, HOA fees

These closing costs are generally paid in full by the Buyer but there are exceptions to this rule.  Talk to your lender to determine if you qualify and what the allowed exceptions to this rule might be.  Beyond qualifying, having the Seller pay any portion of closing costs for a Buyer is a mutual agreement between both Buyer and Seller.  This agreement has been stated as part of the Purchase and Sales Agreement.   Retain this form until tax time as there are items that may be used as a tax deduction.

 *US Dept of Housing and Urban Development

GoodwinRealtyGroup.com

Why should a Seller be concerned about FHA lending requirements for a Buyer?  At the current time, the FHA backed mortgage is the most prevalent loan for a new home purchase.  If you are currently selling your home, it is highly likely one of these buyers will be attracted to your home.  There are four primary changes that a prospective seller should be aware of:

1.       Increased MIP

2.       Higher FICO scores

3.       Down payment requirements

4.       Seller contributions

These proposed changes are being made to insure the continued safety of the FHA program established as a safety net for borrowers that don’t qualify for conventional loans.  The FHA self-insured fund has dipped to a level that has caused considerable concern and threatens the program’s continuance.  All borrowers contribute to this fund by the MIP (mortgage insurance premium) they pay at the onset of their loan.  The new change will increase this contribution from 1.75% to 2.25% of the borrowed amount. 

While the proposed changes will act to infuse additional funds to stabilize the mortgage insurance pool, it will mean that some buyers will simply not be able to qualify and purchase at all!  This loan program has oft been the lowest threshold for buyers who simply have not yet attained a down payment necessary for conventional buying and now that is threatened with increases in the down payment amount moving from 3.5% to 10% for some buyers. 

Sellers might be encouraged that the FHA has taken the pain away by limiting Seller contributions from the current level of 6% to a new limit of 3% of the sales price.  The biggest benefit of seller contributions has been to assist with the payment of closing costs enabling buyers to purchase more expensive homes or to put more money down and mortgage less. 

While it just doesn’t add up, the new requirements will allow a buyer with a FICO (credit score) of 580 or better to mortgage 96.5% of the sales price whereas buyers with a lower FICO score will be penalized by limiting their potential to mortgage 90% of the sales price.  Assuredly there must be tables to prove that those higher FICO scores mean less mortgage defaults but recent graduates, inexperienced  and  good buyers with limited financing history (hence lower FICO score) are included in this group. 

As a result, home sellers might see limited buyers, limited competition and limited activity of their homes.  These proposed changes have no formal date but the expectation is that we will see them begin in the spring of 2010.   At Goodwin Realty Group we know these changes are coming and we are maximizing opportunities for buyers right now by paring them with your home. 

GoodwinRealtyGroup.com

With new regulations about to take effect, what are the changes in store for the new buyer?  There are four primary changes that a prospective buyer should be aware of:

1.       Increased MIP

2.       Higher FICO scores

3.       Down payment requirements

4.       Seller contributions

The FHA mortgage has been the last safety net for borrowers for many years.  Those with limited income, high debt to income ratios and low down payments have been aided by this government backed loan program.  It, like everything else, has been severely tapped by mortgage deficiencies.  Through the collection of MIP (Mortgage Insurance Premium), it has been able to lend money where other conventional lenders were reluctant or unable to do so.  In an effort to boost their self-insured insurance program, the premium set at 1.75% of the borrowed amount will increase to 2.25%.  While seemingly insignificant, it means more ‘out-of-pocket’ money for the buyer.

Defaulting FHA mortgages are the primary reason for the increase in the FICO score –commonly referred to as “credit score”.  New borrowers with less than a 580 FICO score will now be required to have a 10% down payment whereas those with a hearty, healthy FICO score exceeding this amount will still be allowed to qualify with a 3.5% down payment. 

In many new sales transactions, it has been customary to have the Seller contribute closing costs in the form of a dollar amount credit that has been included and factored into the offer price.  By virtue of this additional amount, it has tended to inflate the sales prices of homes whereas the lower, unsubsidized amount would have been reported.  Some believe that this inflation has actually been partially to blame for escalating prices—something all of us have a vested interest in curbing.   Seller contributions will now be limited to 3% of the sales price whereas the current allowance is 6%.  Seller contributions have been an enormous help to bridge the gap that exists when a buyer has either a down payment or closing costs but not both. 

There is no doubt that these changes will limit the ability of some consumers to qualify for a mortgage.  At the current time, the date when these regulations will change has not been formally announced but will occur in the immediate future.  If think you might be one of those affected by these changes, consult us at Goodwin Realty Group so we can assist you in the process and perhaps speed up your purchase to save you money under the current requirements.  

GoodwinRealtyGroup.com