"FSBO" or "buying foreclosures"
"Chicago, IL" or "Florida"
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Choosing the Right Loan
Choosing the right mortgage when purchasing or refinancing is important to both your monthly budget and building equity in your home. One problem causing mortgage borrowers from choosing the right type of mortgage loan is the complex nature of the loan process and inadequate federal home loan disclosures. Many mortgage borrowers choose to rely on the loan officer or mortgage broker to explain the terms of the mortgage loan which is often times not the best source for the mortgage borrower. Mortgage professionals make a majority of their income by commissions. When a mortgage professional closes a mortgage loan they can make hundreds-to-thousands of dollars based on the type of mortgage and how much they charge the borrower. Due to this compensation structure many industry experts and consumer advocacy groups think it is a conflict of interest and that borrowers should seek independant counsel or advice from someone other than the person selling them a mortgage loan.
In a study involving 819 recent prime and subprime mortgage customers in 12 locations around the country, the Federal Trade Commission found that using current "truth-in-lending" and "good faith estimate" disclosures:
• Nearly nine out of 10 borrowers could not identify the correct amount of up-front charges connected with a loan.
• Four out of five had trouble understanding why the stated interest rate on the loan note was different from the "annual
percentage rate" (APR) highlighted in the truth-in-lending disclosure.
• Two-thirds did not spot a potentially dangerous snare lurking in the loan - a substantial penalty if they refinanced within
the first two years.
• Nearly a quarter could not correctly identify the total amount of settlement costs.
A recent interview with Meg Burns co-founder of OfferAngel.com, discussed how mortgage borrowers are better able to understand the loan process and mortgage terms through the application of online technology. The web site enables mortgage borrowers to get more information than the federal disclosure will provide them. The the mortgage terms are transmitted online from the mortgage lender and borrowers view the information in a private Offer Angel account. The company tag line is "The Honest to Goodness Truth About Mortgage Offers." The web site is free to all mortgage borrowers nationwide.
References:
Channel 3 News Interview of Offer Angel
Offer Angel
Baltimore Sun
Zillow Resources:
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