Shopping for a mortgage has just gotten simpler.
Lenders are now required to use easy-to-understand forms providing basic loan terms and good-faith estimates of closing costs. And closing agents are required to provide a settlement statement that clearly compares borrowers' final and estimated closing costs, according to the U.S. Department of Housing and Urban Development.
The new rules, added to the Real Estate Settlement Procedures Act, went into effect Jan. 1.
The new, simplified documentation is aimed at helping consumers fully understand the terms of a mortgage and more easily compare loans from different lenders. It also reminds consumers that they can shop around for the various required closing services, instead of simply accepting their lender's suggestions.
Wednesday, January 20, 2010
Mortgage terms in plain English
New rules this year clarifies mortgage terms for borrowers:
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I'd just be happy with removing all the blank spaces on GFE's, make the whole document self-explanatory, and publishing basic regional cost estimates. There's too much wiggle room to fill in $100 here, $350 there and tell buyers that they're mandatory fees. Its not that those entries are complicated. Its just that there's rarely a clear explanation of what they are and no delineation between costs that are truly mandatory (taxes, insurance, etc) and all the rest of the junk (doc prep fees, courier fees, photocopy fees, etc.)
ReplyDeleteJust making the forms easier to understand doesnt prevent people from gaming the system.
The commenter above, is exactly correct. This doesn't 'help' the borrower - it makes it easier for the lender to hide additional, unmentioned costs, and makes it nigh impossible to explain them.
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