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LESSON 18: WHAT LENDERS MUST DO
You should be aware that several federal laws protect
you during the processing of your loan. The Equal
Credit Opportunity Act, the Fair
Housing Act, and the Fair
Credit Reporting Act prohibit discrimination and provide you
with the right to certain credit information. Meanwhile, the Real
Estate Settlement Procedures Act (RESPA) and the Truth
in Lending Act (TILA) require mortgage lenders and brokers to
provide certain disclosures and forms to you when you apply or shortly
thereafter.
Here, in a nutshell, are some of the required
forms you should expect to receive:
Good Faith Estimate (GFE)
This is a detailed list of closing costs that
the lender must provide to you within three business days of the
time you apply for the loan. You should ask for the GFE before committing
to a loan so you have a pretty good idea of how much your loan will
really cost you. At the same time, remember that the GFE is an estimate.
The actual closing costs you end up paying may differ. You'll want
to compare the GFE to the final list of costs you receive around
closing time and ask your lender about any changes. See
Tips
TILA statement
This tells you the annual
percentage rate, or APR, of your loan. APR is a figure that shows
what the loan would cost you on an annualized basis, given the loan's
rate and the fees associated with obtaining it. The APR figure is
generally higher than the stated or advertised interest rate. Unfortunately,
APR isn't a very good tool for comparing mortgage loans because not
all loan fees are included in the APR calculation. Some lenders exclude
certain fees while others don't, leaving you without an "apples
to apples" comparison of loan costs.
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Some fees -- including property appraisal,
title search and insurance, notary and some recording fees,
credit report and flood certification -- don't have to be
included in the APR quote. Get your lender to spell out each
of the costs.
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