By Morgan Thomas - email
LUFKIN, TX (KTRE) - It was a growing difference between a lender's first estimate and the actual closing costs that prompted the Department of Housing and Urban Development to create new rules to cut down on surprises at closing.
"They want a good-faith estimate to be within a certain variance of the actual costs," said Joe Rich Jr., branch president of Lufkin's BancorpSouth. "So there's no surprise at closing."
Home buyers had become weary of closing costs that seem to skyrocket at the last minute.
"We'll have some surprise closing costs that maybe the buyer said they weren't prepared for," said Becky Stanbery, owner of Coldwell Banker.
The buyer should be prepared at the start of the process when they receive the truth in lending - or the good faith estimate - which lists all costs associated with their home loan.
"The lender will let you know exactly what the closing costs are going to be," Stanbery said.
Real estate agents believe it will cut out what they call junk fees that seem to add up when it's time to seal the deal.
It was usually Internet-based lenders who were guilty of this practice. And these last-minute fees could stop a home sale in its tracks.
"We've had some refuse to close," Stanberry said. "Because they were not told about junk fees maybe in the beginning. Or maybe didn't realize what they were when it came down to closing and the HUD. And actually looking at these costs. Yeah, some walked."
For local banks, these rules just enforce what they already tried to do.
"All the banks in our entire area have always disclosed - have always done a good job in disclosing," Rich said.
Yet, overall, the new mortgage rules will protect home buyers.
"But I think it will be good because it'll make all the lenders be on top of their game from the beginning," Stanberry said. "And all of our local lenders are prepared and ready for it."