Learning the Truth about Your MortgageSheryl Landrum
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Often borrowers go in to sign mortgage loan documents and find their mortgage loan is not the one they negotiated. Suddenly there are origination fees, prepayment penalties, higher interest rates, or loan payment terms different than what had been discussed.
In order to prevent surprises in your home loan, and to compare lenders and mortgage products, always ask your lender for two key documents: the Mortgage Loan Disclosure Statement (MLDS) and the Truth-in-Lending Disclosure Statement.
The Mortgage Loan Disclosure Statement or Good Faith EstimateWhen looking for a mortgage loan, California lending regulations require a written disclosure statement to be provided to the borrower within three business days of receipt of the signed loan application. This disclosure states the expected maximum costs and expenses the borrower will incur for his or her mortgage loan including: origination fees or discount points, appraisal fees, credit report fees, lender fees, title and escrow fees, as well as recording and notary fees.
Telling the Mortgage Truth with the Truth-in-Lending Disclosure StatementThe TIL gives you details of your loan, including the note rate and the annual percentage rate (the cost of credit expressed as a yearly rate), the amount financed and the terms, the type of loan (i.e., fixed rate or variable rate mortgage, fully amortized or interest only), and whether there is a prepayment or demand feature on the note.
Two Important Disclosures Equal Two Important Benefits to Your Home LoanHome mortgages are generally our biggest expense in life. As borrowers, we want the best loan possible and no surprises when it comes to signing on the dotted line. Only with the Mortgage Loan Disclosure Statement and the Truth-in-Lending Disclosure Statement can you adequately compare lenders and their products. Reputable lenders and brokers will readily provide mortgage loan disclosures. Run (or anticipate some nasty surprises) from those lenders who won't!
About the Author
Sheryl Landrum is a Senior Loan Officer with First Capital Mortgage in San Diego and Prudential Realty in Bonsall, California.