Surprises can be fun, but there should not be any surprises at the closing table. Gathering the necessary paper work for a mortgage and trying to understand it all can be overwhelming. Some lose track of what they are signing and others "check out" and just want it to end. I've heard many stories of borrowers receiving an unpleasant surprise - higher than anticipated closing costs - and that should never be the case.

Until recently, rules about mortgages allowed for a lack of clarity in homebuyers' closing costs. Mortgage brokers were required to give clients a "good faith estimate" (GFE) on the costs, but that was it. Because what was in those estimates was not standardized, it was difficult for consumers to shop around.

Fortunately, that has changed. Thanks to the new Real Estate Settlement Procedures Act (RESPA) regulations that took full effect last month, the process of getting a mortgage and understanding the closing costs has just gotten much more transparent.

Closing costs: Points vs. Interest Rates
Even sophisticated buyers can be confused about how to calculate the trade-off between points and interest rates. Buyers wonder: Does a really low interest rate come with the catch of paying points? Wouldn't that mean that the length of time you intend to keep your house would dictate whether you should get a mortgage with points? Start talking about discounted points and yield spread premiums, and you've got some consumers eyes glazing over for sure. The new rules make understanding the difference simpler.

GFE + HUD-1 = Happy Marriage
The GFE and the HUD-1 forms are the two main documents needed at a real estate closing to spell out costs. The HUD-1 Settlement Statement is a standard form used to itemize services and fees charged to the borrower by the lender or broker.

Before the new rules took effect, imagine the two forms as spouses who sniped at each other a lot. They could work well together, or they could say completely different things and seem to be at odds. Under the new RESPA rules, the two are like a couple who went through marriage therapy and learned how to communicate.

Therefore, the good faith estimate will need to coordinate with the HUD-1 form. The wording of the two documents will be the same, so that consumers can do form-to-form comparisons. Some of the things you will see in the GFE and HUD-1 form include interest rates, points, title and transfer charges, title search charges, and insurance costs.

Consumer Information
Consumers are in a better position than ever before to understand the costs associated with the mortgage process. However, like your mother always told you, with any new privilege comes some new responsibility. The new rules are only as good as you make them. When meeting with a lender:

• Be sure to ask about interest rates and points.
• Compare the costs of different lenders before making a decision.
• Ask to see the HUD-1 statement and the GFE the day before the closing.

Like I always tell you, my trusted readers, you have to make decisions based on your own financial situation. The RESPA regulations are great news for consumers, but they don't mean that you should pay any less attention to your financial situation than you did yesterday.

Debbie was interviewed recently on Money Matters Radio. Debbie's segment focused on the recently released housing sale numbers as well as the HUD changes that we explain in the article above.

5 Inexpensive Home Upgrades

Do you suffer from "Other People's Homes Are Nicer" syndrome? You have lots of company. Many of my clients want a new house because they visited a friend or relative who had a "nicer" house. When you ask them what is nicer, they often mention features or details that could be added to their own homes.

While changing your floor plan or expanding your space often requires a rather large investment, there are lots of upgrades you can do that will cost under $1,000 but make a big difference.

Improve the look of your fireplace and hearth.
If you have an old mantel thick with years of paint, you may be longing for that historic look of natural wood. For about $500, a carpenter can come to your house, remove the mantel, and dip it in paint stripper. What you get back will look like it has been carefully restored all these years. A new mantel would cost upwards of $3,000.

You can also try changing old, dilapidated hearth tile or brick into something new and shiny to spruce things up. A gas insert with a nice enamel front will add a nice look and bring some efficient warmth.

Add some wainscoting.
Not all my clients live in 100-year-old houses loaded with details. While newer home offer lots of amenities and luxuries, some are awful short on that ever elusive commodity: character. You can have wainscoting installed in some rooms inexpensively. Dining rooms can be changed dramatically, as you can have plate shelving installed and display decorative plates, too.

Bring the indoors out.
If you don't already have one, add a brick patio or deck to your home. No matter how small the yard, having a little spot to go to and sit when the weather is warm is priceless. Actually, you can put a price on it. Research shows that home values reflect the addition of a deck or patio.

Upgrade your kitchen.
If you have the space, adding a kitchen island or a bar will add seating and value to your home. If not, there are other steps you can take to make the kitchen more modern and new looking. You can change out your countertops for a few thousand dollars or add a tile backsplash for even less. For lower cost improvements, think about adding a new faucet or new cabinet hardware.

Boost your bathroom's beauty quotient.
Oh, the bathroom. We've all seen those gorgeous baths in showrooms that make us swoon. You don't need a two-inch thick glass shower enclosure to enjoy your morning routine, but you might enjoy some cosmetic improvements there. Adding bead board will give the room a richer look, and it is inexpensive to install. For an even less costly improvement, put your trash out of sight, add some houseplants, and get a new shower curtain.

Given all of the economic stimulus money and tax advantages we've been hearing about, it's a good time to meet with your financial planner and accountant to see if you qualify for any of them.

Some of the specific ones include programs for first- time home buyers and The Earned Income Tax Credit (EITC). Check out the IRS website to read about some of them.

If you need a good financial plan and aren't sure who to speak with I would be happy to give you a couple of names . Everyone should have a plan, and you're more likely to stick to it if you have professionals on your side to navigate these confusing times.

I'm always happy to take your calls and emails regarding home buying or refinancing!

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