Whoa! Did Clark Howard really say that?

March 8, 2010 · Leave a Comment

By: Meril Missbach

While driving in the ‘burbs a couple of weeks ago listening to the radio, I could swear I heard Clark Howard advise his listeners to NOT purchase a home until AFTER the current tax credit opportunity expires.  I almost wrecked my car!  Did he really say that?

He went on to say you might get an even lower price if you wait until after April 30 to purchase a home because then “there will be no buyers.”   I couldn’t believe my ears.  What are you thinking, Clark!  You’re usually “my man,” but I just don’t agree with you on this.

Here’s my take on the situation:

#1  People will still have babies and life-changing experiences, causing them to purchase homes even after the tax credit opportunity expires. So there will be buyers.

Yes, I anticipate the sales pace will be slower after the tax credit expires because there are a lot of smart people out there.  They aren’t going to leave money on the table by not taking advantage of that tax credit if they are eligible.  They are going to get their dream-home under contract by April 30 because it DOES NOT seem likely that the tax credit will be extended again.

So, ladies and gentlemen, start your engines.  Get out there and get shopping.  Prices are low, interest rates are low, and there is ample inventory from which to choose.  There’s a house out there for you.

#2  Yes, it is a buyer’s market, but this market is also like an estate sale. The best things will sell first.

So, if I heard you correctly, Clark, and you suggest home buyers wait until after April 30  to purchase a home,  then I hope your listeners are prepared to select from “picked over” goods.  If you’ve ever been to an estate sale on the last day when everything is 50% off, you know what I mean.  The good stuff is gone, and you’re picking from Aunt Ella’s gargoyles.  Sure, the price is cheaper, but is there anything there that you even want to buy?

You home buyers out there….. I encourage you to be financially savvy, but buy something you love, and think about these things:

  • Is this where you want to come home to at the end of the day?
  • Does being here make you happy?
  • Regardless of what you paid for it, when you are ready to move again, how easy
    will it be for you to sell this home in a more normalized market?

Your house is a big, big investment, but it’s also so much more.  It’s your happy place; it’s your refuge;  it’s who you are.

Well, Clark, if I heard you correctly the other day, I just don’t agree with you.  If I have misquoted you because I misunderstood something in the broadcast, then my apologies.  aIn fact, it would almost be a relief.  I just can’t believe you encouraged home buyers to leave the tax credit dollars on the table.  They paid it in, and now they have a short period of time in which they can get some of it back out.  I say go for it!

Categories: Tax credit
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A move in the right direction: The new disclosure guidelines and how they may impact closing dates

August 6, 2009 · Leave a Comment

By: Meril Missbach

In an effort to protect consumers, changes were recently made to improve mortgage disclosure, as part of Truth in Lending.  The official name of the new act is, “Mortgage Disclosure Improvement Act” (MDIA), and I think this is a move in the right direction to protect consumers from unscrupulous, predatory lenders.

Here are the main features of this new act:

  • It defines fees that can be collected by a lender before they provide an initial Truth in Lending disclosure.
  • It specifies when the lender must deliver Trust in Lending Disclosures to the borrower.
  • It sets waiting period that must occur before closing can take place.
  • It requires additional disclosures from the lender and additional time between the disclosure and the closing dates if the Annual Percentage Rate quoted by the lender changes by more than 0.125%.

Quite a few actions could cause an APR to change, including a change in the interest rate, loan amount, type of loan, fees charged or loan-to-value ratio. Under Truth in Lending, the lender must disclose up-front what changes have affected an ARP, so borrowers can realize how much money the lender is actually receiving for services related to the loan.

If the ARP does change, the new Trust in Lending disclosure requires a longer time period to pass before the closing of the loan, allowing consumers additional time to analyze any changes and, therefore, the time to make necessary decisions before closing. Below is a simple summary of the new timeline:

  • The Trust in Lending disclosure must be delivered to the borrower 3 business days after the application is received (business days include Saturdays, but not federal holidays).
  • The closing can occur 7 business days after the lender delivers the Trust in Lending disclosure to the borrower.
  • If there is a change of 0.125% or more in the APR, a new disclosure from the lender is required and the closing cannot occur for another 3 business days after the lender delivers the new disclosure.

If buyers must close by a certain date, it’s recommended that they lock in loan rates 5 days before closing to minimize the possibility of last-minute delays.

I see this as a move in the right direction.  These new rules probably won’t delay many transactions, but it will likely protect unsuspecting buyers from an unwelcome surprise when it’s time to close.

Categories: Closing