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Home Loan Questions: Truth in Lending and Good Faith in Your Mortgage
by Gil Mackey
CMR Columnist
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Everyone has questions during the mortgage process. Whether you are applying for a new home loan or a mortgage refinance, it's ok to take the time to ask all the questions that help you understand what you're getting into.
Mortgage Help
When you apply for your new home loan your mortgage lender provides you with a 'good faith estimate' document that outlines the closing costs you can expect to pay on your loan. You also get the same document if you plan to refinance. This good faith estimate was a product of the Real Estate Settlement Procedures Act of 1974, which was established by Congress to eliminate kickbacks between companies involved in the real estate industry. This act requires that lenders provide you with an itemized list of your estimated closing costs either at the time of your home loan application or mailed within three business days.
Truth in Lending
The Truth in Lending Act was established in 1968 and requires mortgage lenders to provide you with a detailed outline of the costs of your new home loan or refinance. This document tells you what your finance charges are for the home loan, the number of payments, and the amount of each payment. It also shows your interest rate expressed as an annual percentage rate (APR). The APR is higher than the interest rate on the loan because it includes all the closing costs and other costs lumped together with the interest to be paid.
Mortgage Questions
It is completely natural to have questions during the mortgage process. No one expects you to understand everything going in, or that you completely understand the first time around. Make sure to go over these documents with your mortgage lender when you apply for your new home loan or refinance.
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About the Author
Gil Mackey has been a writer and artist for the past twenty years. In addition to freelance writing for QuinStreet he writes for his local paper, and lives with his two children in Nevada.
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