It has been approximately a month and one half since the new law came into effect altering Good Faith Estimate Disclosures and RESPA Reform, essentially changing estimates into contracts.RESPA Reform was initiated to bring greater clarity and transparency in the settlement process ad provide consumers greater protection surrounding the terms and settlements charges for their mortgage loans. However, as is often the case when dealing with government intervention, January was filled with numerous classes training lenders in the intricacies of the changes and the stress created over possible liability of the lenders in "zero tollerence" issues is immeasurable. Further, many Realtors haven't been given enough information from either their brokers or lender reps to cover these vital issues.It is concievable that this example could play out: A lender gets a client, in escrow, from that a Realtor that they have never done business with in the past. The lender under discloses fees and charges represented on the GFE in order to win the Realtor. However, at the end of the process when said lender realizes that, because of the under-disclosure, they will have to pay all fee in excess of the disclosed amounts on the GFE. Now the lender may figure that since they have never done business with the Realtor in the past, and now since the loan is going to cost them their entire commission; they can conclude that because of the outcome of this transaction, they will never do business with the Realtor in the future, said lender will simply cancel the loan just before funding and walk away. You can imagine what will follow.Protect your purchase transaction, get educated, and establish deep relationships with your proven/reputable lenders!
I think that the comments that everyone has sent you are extremely strong and accurate! At the end of the day though, the most important consideration will be the actual value of the property.Automated Valuation Mechanism (AVMs), like the one used on Zillow, are great; however, at best they are snap shots of a particular time and place. Though they [AVMs] will give a good idea of a value, they can be unreliable, especially in an unstable market where you have a lot of fluctuations in the raise and fall of home values in a given area.Consider that the lender that you chose for your refinance will likely require an appraisal. They need to know the exact value of your property in order to establish the "loan to value ratio". As you can see, though your concerns about the adjustment of the interest terms is valid, the answer to your question really begins and ends with an appraisal to establish property value.
It depends, there are other options to be considered. Consider many of the regional assistance programs, such as county economic development programs. Also, VA loans are a great option, and depending on the sales price, it's a great option for 100% financing. You just need to know if your client is a vet.
I agree with Daniel,If you just want a quick reference, then there are several sources for home valuations. Zillow's Zestimate is a very good source. However, without an actual appraisal, the outcome is just that, an estimate.In the end, if the "seriousness" of transaction will dictate the need to contract an appraiser!