The Market is down but can I afford this House?

It’s the New Year and everyone’s pumped up and ready to fulfill their resolutions. The housing market is down and the words “tax credit” looms foremost in the minds of hopeful buyers; yet the most important question remains to be answered. Can I afford to make such a purchase?

Well, effective January 1, 2010, the new Real Estate Settlement Procedures Act (RESPA) rule goes into effect and should help to clarify some of the questions buyers may have regarding affordability. The Good Faith Estimate or the GFE as it’s commonly called, allows the lender to outline the fees and settlement charges associated with obtaining a mortgage, so that a buyer shopping for a loan can decide which is best, as well as the affordability. The form will be standardized so no matter which lender provides it, the form should look exactly the same thereby allowing for easier cost comparisons.

The GFE should give loan terms and settlement charges, showing what charges can change and those that will remain unchanged. This is important because often first time borrowers in particular, tend not to think of or be aware of other associated expenses other than the purchase price.

It is hoped the new rule will have the desired effect of helping home buyers make more informed decisions.