What Happens To Your Deposit Money in CT if You Can't Get a Loan on Time?

When a Buyer makes an offer to purchase a home, the offer is accompanied by an earnest money check, also commonly known as a down payment. 

In the State of Connecticut, typically a Buyer provides the Seller with a check for ten percent (10%) with the signing of the Contract and provides the remaining Ten percent (10%) at closing. The numbers are not set in stone but the more money offered as a down payment the more likely the Seller will accept an offer and the easier it is to be approved by a Lender for a Mortgage. 

The down payment is held in trust in the Seller's attorney IOLTA ( Trust ) Account.  In the Connecticut, if agreed to by the parties, this down payment may be released to the Sellers once the Buyer has obtained his/her Mortgage Approval. 

However, in the last 8 to 10 years, most Connecticut Bar Associations have written into their rules that the down payment funds can not be released until the time of closing.  In the State of New York, it is illegal for an attorney to release the down payment funds before the closing.
 
A question arises as to what happens if the Buyer does not get his/her Mortgage by the deadline.  If the Buyer does not get his/her Mortgage by the date stated in the Contract of Sale, the Buyer's attorney should ask for an extension to obtain the Mortgage Approval.  If the Buyer's attorney does not request that extension in writing, the Seller could be  entitled to the down payment if the transaction does not go forward. 

Also, if the Buyer backs out after signing the Contract, the seller may be entitled to the down payment.  Most Contracts have a liquidated damages clause, which allows the Seller to keep the down payment if the Buyer defaults.  If the Buyer does not qualify for the Mortgage and advises the Sellers in a timely fashion, the down payment is returned to the Seller.
 
However, it is not that easy for the Sellers.  If the Buyer had an extenuating cirmcumstance, i.e. - a death in the family, lost a job after entering contract, etc., the courts will look to these cirmcumstances and not allow a windfall to the Seller. 

Most courts will allow the Seller to be able to keep the difference to make him whole.  He can not reap a benefit from the default.
 
Every circumstance is different.  Keep an  eye on the dates in the Contracts, do everything in your power to meet your deadlines and if you cannot, ALWAYS request an extension in writing.  As a common courtesy most attorneys will allow for a one week extension and in the current mortgage environment more.

Article Submitted by Attorney Felicia B. Watson

FeliciaWatson@sbcglobal.net

Connecticut Mortgage Rates and Financing Update September 9, 2011

The rapid rallies of the market this week equals high pricing volatility. Mortgage Backed Securities don't like volatility and neither do lenders making rate sheets.  The Friday rally is all EU Panic-driven. Greek default, Stark exit, take your pick. If Greece is alive on Monday, no more 1.8's in 10 year notes (probably?) We don't normally see aggressive moves on Mortgage Backed Securities  settlement dates. Lenders will probably want more assurance of current benchmark ranges before getting more aggressive with rates.  Lenders have recently gotten more aggressive with rates anyway! Another move down so quickly is going to cause capacity and fallout issues, which will cause rates to rise again with some lenders so they can control their pipelines.  The bottom line , this speaks to bigger re-prices for the better. If we hold or improve upon these levels, "token" re-prices for the better are quite possible.

This Week's Financial News

"Economic activity continued to expand at a modest pace, though some Districts noted mixed or weakening activity," the Fed said in its Beige Book collection of anecdotal reports of economic conditions in the 12 Fed districts. Growth was modest or slight in five districts, while the remaining seven described activity in terms such as "very subdued" or "more slowly." In the Fed's last Beige Book covering the period into early July, eight regions characterized growth as having slowed. Consumer spending increased in most districts, but spending on items besides cars was flat or down in several places through late August, Fed said. Manufacturing conditions were mixed across the country and had slowed in many districts, the central bank said. Hard-hit residential real estate markets remained weak overall. Price pressures edged lower, although retail prices rose in some districts, the Fed said. Labor markets were generally stable and some districts reported modest gains.

“I think we’ve got a good chance of continuing a moderate pace of growth coming out of this crisis,” Geithner said today in an interview with Bloomberg Television in Marseille, France. If Congress approves the plan, “it would dramatically reduce the risk of a long period of much weaker growth.” U.S. Treasury Secretary Timothy Geithner said on Friday that the administration did not need an act of Congress for new initiatives to boost refinancing of federally supported home mortgages. He said more details on how refinancing would work would be announced in the next three weeks.  The indications are, it is a revamping of the current HARP/HAMP program that allows borrowers to refinance their current first mortgage at current market rates if the homeowner is underwater on the value of their mortgage debts.  There is no indication that a new program is under consideration for those borrowers underwater who do not qualify for the current refinance programs.

Today's Mortgage Rates

30 year fixed - 3.99% + .0 points for rate
20 year fixed - 3.75 % + .0 points for rate
15 year fixed - 3.250% + .0 points for rate
10 year fixed - 3.250%  .750% lender credit points for rate
5/1 ARM - 2.50% - 0 points for rate
7/1 ARM - 2.875 %  + 0 points for rate

FHA/VA
30 year fixed - 4.005% +  0 points for rate
5/1 ARM - 2.750 +  0 points for rate
7/1 ARM - 3.25 + 1.00 lender credit  point for rate

Jumbo - over 635,000 up to 2,000,000 at 80% loan to value
30 year fixed - 4.625 % with +0  points  for rate
15 year fixed - 4.125% + 0   points for rate
5/1 ARM - 3.125 % + 0 points for rate
7/1 ARM - 3.625% + 0 points for rate

10/1 ARM -  4.250% with + .0 points cost for rate

Jennifer Buchanan,  Certified Mortgage Planning Specialist at MetLife Loans is a seasoned veteran of the Mortgage, Banking and Broker Industry and specializes in mortgage loans throughout Fairfield County, Connecticut.
   Her attention to detail is unsurpassed, and her understanding of the marketplace makes it easy to find the right loan to fit her clients specific needs .  Jennifer's local processing and closing team are also known for their exemplary service.
   Understanding that the vast majority of mortgage brokers never discuss the long or short term  financial needs or goals with their clients, she set herself apart from the rest by obtaining the coveted CMPS  designation. (Certified Mortgage Planning Specialist)
    She is a member of the National Association of Responsible Loan Officers, and her commitment to ethics, understanding of the marketplace, and business acumen have earned her the respect of her peers and clients alike.

Jennifer Buchanan
Metlife Loans
203-341-6949

Jennifer Buchanan- Your certified expert
 on mortgages offering Free Unbiased
recommendations based on your needs.

How much of a downpayment do you need in order to buy a home in CT?

You may have heard that you need a 20 percent downpayment, a 10 percent deposit,  five percent down, or even less to buy a home. It really all depends on a  number of factors besides your credit-  including your income, your liquidity (or cash on hand), your debt ratio, and what price range that you are looking in.

Years ago, the accepted standard for a downpayment was 20 percent. Prices were also much lower then, and that twenty percent downpayment was a lot easier to attain. We call that percentage a  conventional downpayment nowadays.  At some point a ten percent deposit was acceptable, as long as you paid the bank Private Mortgage Insurance (PMI).  PMI is essentially insurance to cover the bank  in case of a default. When you reach 20% equity and can prove it, you can usually get the PMI removed. For you professionals out there, yes- I am simplifying it for the masses. If and when you have a question about PMI, it's best to contact your mortgage broker or the bank that holds your loan for their policies.

Around twenty or so years ago,  five percent down became an acceptable downpayment, and much more common than one might think. It has been  fairly common ever since. You can also get a government backed loan with as little as 3.5 percent downpayment (FHA). The PMI is necessary for these loans as well, although some loan providers also allow you to opt to pay a one time PMI  fee, instead of monthly, or a combination of the two.

Now that we have the percentages down, you also have to qualify for the loan amount that you are looking for.  Of course, I can give you an estimate, but it really is best to meet  with a mortgage broker  who can guide you in the right direction with the loan amount and type of loan that's best for you. We  post current financing rates here every Friday  and you can check our blog for rates, and you may wish to Contact a Mortgage Broker to get clarity on your particular situation. We happen to like Jennifer Buchanan, among others. See her contact info at the bottom of Every Friday's Financing Update.

If you really think about it, and you were thinking about just renting a home, you may want to consider buying.  In order to rent anywhere, you generally need three months rent to move in. (That's one months rent, and two months security) That number is usually very close, and in some instances MORE than a 3.5 percent deposit. We can always negotiate closing costs, so you may very well be able to buy when you only thought you could rent. Give it some thought.

The rates are historically low, and prices are very good right now. You would be getting in on the ground floor!

If you are thinking about buying and want to browse the MLS, you can do so with unlimited access right here on our site, or if you are ready to look right now, we can get started right away. We 'll get you the best deal whenever you're ready.

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Connecticut Mortgage Rates and Financing Update September 2, 2011

Rates continue to be historically good, and should be for quite some time. Of course we will see daily fluctuations, but with the Fed firmly in the 0% and plan to stay there mode, mortgage rates should continue to sit around these levels for quite some time.

This week's Financial News

 The Wall Street Journal reported that "Bank of America Corp. intends to sell its correspondent mortgage business, as the troubled lender looks to narrow its focus and bolster its financial strength...Employees could be notified as soon as Wednesday that the lender has decided to exit the correspondent channel because it no longer fits with the long-term strategy for its mortgage unit. The company decided to get out roughly four to six weeks ago, following a review led by mortgage chief Barbara Desoer. The business employs more than 1,000 people."   What this means is, there are fewer and fewer big lenders in the business, the pricing on Chase home loans last week were in excess of 1.00% higher than other lenders - big banks do price themselves out of the market when - they are about to close a division or they have more loans application than they can close.  


The Federal Housing Finance Agency (FHFA) has reported the national average mortgage rate for the purchase of previously occupied homes by combined lenders was 4.57 % for loans closed in July - a decrease of 0.05% from the previous month. The average interest rate on conventional, 30-year, fixed-rate mortgage loans of $417,000 or less decreased to 4.69% in July. The FHFA also reports that the contract rate on the composite of all mortgage loans (fixed- and adjustable-rate) was 4.55% in July, down from 4.61% in June. The effective interest rate, which reflects the amortization of initial fees and charges, was 4.67% in July, down 7 from 4.74% in June.


U.S. home prices increased by 3.6% in the second quarter, after having fallen 4.1% in the first quarter, according to new data from the Standard & Poor's (S&P)/Case-Shiller Home Price Indices.

"Looking across the cities, eight bottomed in 2009 and have remained above their lows," says David M. Blitzer, chairman of the index committee at S&P Indices. "These include all the California cities, plus Dallas, Denver and Washington, D.C. - all relatively strong markets. At the other extreme, those which set new lows in 2011 include the four Sunbelt cities - Las Vegas, Miami, Phoenix and Tampa - as well as the weakest of all, Detroit. These shifts suggest that we are back to regional housing markets, rather than a national housing market where everything rose and fell together."   Today's Mortgage Rates 30 year fixed - 4.250% 0 points for rate 20 year fixed - 3.875% 0   points for rate 15 year fixed - 3.250%  0 points for rate 10 year fixed - 3.250%  + 1.00 lender credit points for rate 5/1 ARM - 2.50 %  0 points for rate 7/1 ARM - 3.00%  + 0 points for rate FHA/VA 30 year fixed - 4.250% +  0 points for rate 5/1 ARM  - 2.75+  0 points for rate 7/1 ARM - 3.250 + 0 point for rate Jumbo - over 729,000  up to 2,000,000 with 20% down on purchase 30 year fixed - 4.750 % with 0  points  for rate 15 year fixed - 4.375 % + 0   points for rate 5/1 ARM - 3.250 % + 0 points for rate 7/1 ARM - 3.75% + 0 points for rate 10/1 ARM -  4.375% with + 0 points cost for rate Jennifer Buchanan,  Certified Mortgage Planning Specialist at MetLife Loans is a seasoned veteran of the Mortgage, Banking and Broker Industry and specializes in mortgage loans throughout Fairfield County, Connecticut.    Her attention to detail is unsurpassed, and her understanding of the marketplace makes it easy to find the right loan to fit her clients specific needs .  Jennifer's local processing and closing team are also known for their exemplary service.    Understanding that the vast majority of mortgage brokers never discuss the long or short term  financial needs or goals with their clients, she set herself apart from the rest by obtaining the coveted CMPS  designation. (Certified Mortgage Planning Specialist)     She is a member of the National Association of Responsible Loan Officers, and her commitment to ethics, understanding of the marketplace, and business acumen have earned her the respect of her peers and clients alike. Jennifer Buchanan Metlife Loans 203-341-6949

Connecticut Mortgage Rates and Financing Update August 26, 2011

Now more than ever, it's imperative to compare rates, as the big lenders have pipelines full of loans for refinances, they have raised their rates to control their pipelines, and do not show signs of lowering them.  Also, with the market moving at break neck speed the bigger lenders are much slower to update and reprice their loan products. 

This Week's Financial News

MBS dipped from 104  to 103 -16 at super sonic speed. 10 year yields rose from 2.13 to 2.21 in the same instant. Why? Over the last 3 Jackson Hole days 10 yr yields have swung an average of 16 bps.   The fact that recent swings in 10 year yields took them exactly to a technical level and a supportive bounce reinforces the current marketing thinking there is no reason to panic. Fannie 4.0's are back to 103-30 now. 10 year yields are at 2.188.  

“With average prices on distressed real estate trending down and average discounts trending up, this report is clearly good news for well-positioned buyers and investors looking for bargain real estate that will build them wealth in the long term and often cash flow as rental real estate in the short term,” said James Saccacio chief executive officer of RealtyTrac. “Maybe less evident, however, is the good news in this report for distressed homeowners looking to sell, and even lenders saddled with large portfolios of delinquent loans."  

(Reuters) - Federal Reserve Chairman Ben Bernanke on Friday stopped short of signaling further action to boost growth, but said it was critical for the economy's health to reduce long-term joblessness. "It is clear the recovery from the crisis has been much less robust than we had hoped," he said in remarks prepared for delivery to an annual Fed retreat. Bernanke said the Fed will meet for two days in September instead of the planned one to mull its options to provide additional monetary stimulus, among other topics. The Fed chairman said reducing the record high level of workers who have been unemployed for six months or more would help achieve stronger U.S. economic growth. "Under these unusual circumstances, policies that promote a stronger recovery in the near term may serve longer-term objectives as well," he said. (Reporting by Mark Felsenthal; Editing by Neil Stempleman)

Bernanke spoke at this same conference a year ago amid similar fears, and laid the groundwork for an aggressive bond-buying program by the Fed. Some hoped for a similar monetary boost this year. But with inflation inching up, Bernanke has less room to maneuver.

Today's Mortgage Rates

30 year fixed - 4.125% + ..50 points for rate
20 year fixed - 3.75% + .375 lender credit  points for rate
15 year fixed - 3.250% + 0 points for rate
10 year fixed - 3.250%  0 points for rate
5/1 ARM - 2.625% - 0 points for rate
7/1 ARM - 3.00%  + 0 points for rate

FHA/VA
30 year fixed - 4.250% +  0 points for rate
5/1 ARM  - 2.75+  0 points for rate
7/1 ARM - 3.250 + 0 point for rate

Jumbo - over 729,000  up to 2,000,000 with 20% down on purchase
30 year fixed - 4.750 % with +.50 cost  points  for rate
15 year fixed - 4.375 % + 0   points for rate
5/1 ARM - 3.375 % + 0 points for rate
7/1 ARM - 3.75% + 0 points for rate

10/1 ARM -  4.375% with + 0 points cost for rate

Jennifer Buchanan,  Certified Mortgage Planning Specialist at MetLife Loans is a seasoned veteran of the Mortgage, Banking and Broker Industry and specializes in mortgage loans throughout Fairfield County, Connecticut.
   Her attention to detail is unsurpassed, and her understanding of the marketplace makes it easy to find the right loan to fit her clients specific needs .  Jennifer's local processing and closing team are also known for their exemplary service.
   Understanding that the vast majority of mortgage brokers never discuss the long or short term  financial needs or goals with their clients, she set herself apart from the rest by obtaining the coveted CMPS  designation. (Certified Mortgage Planning Specialist)
    She is a member of the National Association of Responsible Loan Officers, and her commitment to ethics, understanding of the marketplace, and business acumen have earned her the respect of her peers and clients alike.

Jennifer Buchanan
Metlife Loans
203-341-6949