There is now a program that will allow people to rent a property for up to five years with the right at any point within those five years to purchase the property outright.
This program is ideal for people that for some reason or other are currently unable to buy a home right now but will be able to in the coming years. This allows homebuyers to rent their dream/forever home with the intent of buying it outright once they are ready and able to do so.
However, you only enter into a 12-month lease term and after that you are free to leave the home without buying or renting it further. You do, however, have the right to buy should you wish to do so, for up to five years after commencement of the lease.
The rent and the right to buy price are pre-determined and set out at the start of the transaction so that you can see what your rent or option to buy prices are in years' one through five. This way there are no surprises down the road.
There is a $70 application fee per household and the main concern here is not so much the credit rating but more so any criminal history.
Once the application is approved you will be given a monthly rental ceiling at which you can apply and this will tie in exactly with properties currently for sale in your area.
To find out more and to see if this program is available in your zip code email Mark on firstname.lastname@example.org or text your zip code to 443-852-5685.
The Consumer Financial Protection Bureau's (CFPB) "know before your owe" initiative aims to better explain the loan implications to borrowers so that they better understand the mortgage terms they are signing up for. This will likely lead to longer loan processing periods but should alleviate any last-minute shocks or drama.
The new process will lengthen the amount of time it takes to close on a property from 30 to 45+ days, and homebuyers should take this into consideration when planning ahead.
The TILA-RESPA Integrated Disclosure Rule (TRID) came into effect on Oct 3, 2015, and comprises two main sets of documents, eight pages in all; the loan estimate, and the loan disclosure.
The loan estimate
You’ll receive the loan estimate within three days of providing basic information to each potential lender. It details the terms of your loan, including:
Expenses, with clear “yes” or “no” answers to important questions, such as whether an amount can increase after closing, whether or not your loan includes a prepayment penalty or a balloon payment, and what expenses are included in your escrow account
The projected monthly mortgage payment, including taxes, insurance and other assessments
Estimated closing costs and the amount of cash you’ll need to have on hand at the time of settlement
Information on services you can — and cannot — shop for, such as pest inspections, survey fees and the appraisal
The loan estimate also offers data that can help you compare one loan offer against another, including total costs, annual percentage rate (with fees) and the total amount of interest you’ll pay over the loan term, expressed as a percentage of your total loan amount.
The closing disclosure
The closing disclosure replaces the HUD-1 Settlement Statement and the Truth-In-Lending Statement. You’ll receive this document three days before your scheduled loan closing.
The closing disclosure provides the information from your loan estimate — such as the locked-in costs of your loan and exactly what you’ll need to pay at closing — in final form. You’ll want to make sure that you’re aware of any changes.
What can cause a three-day delay
Under the new rule, a substantial change to the loan terms triggers a new three-day review. A change in the amount of a real estate agent’s commission, modifications to the escrow and adjustments to prorated payments for taxes and utilities and the like don’t qualify. The CFPB says only three things can reset the 72-hour clock:
The APR (annual percentage rate) increases by more than 1/8 of a percentage point for fixed-rate loans or 1/4 of a percentage point for adjustable loans. But this is not new. Such rate changes have required a three-day notice since 2009.
A prepayment penalty is added to the loan terms.
The basic loan product changes, such as moving from a fixed-rate to an adjustable-rate loan or to an interest-only mortgage.
What you can do
The “Know Before You Owe” disclosure rule may simplify mortgage paperwork, but it doesn’t simplify the mortgage process itself. If you’re buying or selling a house prepare for a longer closing process. You might want to adjust the term of your rate lock accordingly. And keep the lines of communication open with your lender and seller to avoid closing roadblocks.
Delays, even short ones, can put a buyer at a disadvantage to cash bidders in hot real estate markets. But understanding your loan terms can save you from headaches later.
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