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Q: How can I obtain a copy of my credit
report?
A:
There are three main credit bureaus that provide credit information to
CRAs. You may write or call any of these bureaus to obtain a copy of
your credit report. Keep in mind that the bureaus do not share
information with each other, so you should contact all three to get a
full picture of your credit.
Equifax
Information Service Center
P.O. Box 740241
Atlanta, GA 30374-0241
1-888-909-7304 (phone)
Experian (formerly TRW)
National Consumer Assistance Center
P.O. Box 2104 Allen, TX 75013-2104
1-888-397-3742 (phone)
Trans Union Corporation
Consumer Disclosure Center
P.O. Box 390 Springfield, PA 19064-0390
1-800-888-4213 (phone)
Q. What should I know about these so-called "No Cost Loans" or "Loans with No Origination Fees, etc."?
A:
There is no such thing as a "No Cost Loan". We all know that "nothing is for free" and processing home loans and home re-financing have related costs involved like any other service we purchase. In addition, there are a large number of both Governmental as well as State and sometimes locally related legal requirements that add fees and cost structures to processing a home mortgage loan
You need to be aware that typical "Total Closing Costs" can run anywhere from 2% to over 5% of your loan amount. These fees are to pay for the research, documentation and preparation of all of the necessary legal documents related to your home and your loan.
Q. Who gets these fees?
A:
Your closing costs typically will include fees to:
The Lender
The Title Company
The Appraiser
The Broker (that's us)
Plus several other entities that must do some work on your
Loan to get it through the process.
In addition, both your Homeowners insurance and property taxes are escrowed and any open balances will be collected at your closing. (You do get these monies back from the appropriate group after closing)
You are paying for the services of a broad number of Mortgage Professionals who must handle over 25 separate actions needed to prepare your application for approval and ultimately a closing.
Q.What should I expect to pay a broker?
A:
A good broker will charge you a fair and reasonable price and help make sure the other fees being charged are in line with standard policies. Your Broker will help make the process easier and they will "run Interference for you." Fees can range from ¾% to 2% or more depending on the size, complexity and difficulty factor of your loan. Keep in mind your broker should provide you with a clear and concise summary of all costs in the "Good Faith Estimate"
Your Broker's job it is to find you the best loan program to fit your needs. Most good brokers deal with a number of 'Lenders". Reputable companies that offer finance and re-finance money to people like you. He or she will then manage the maize of legal and financial hurdles to bring your loan to a successful closing. Keep in mind that a good loan is one that offers a good interest rate (not always the lowest), no pay-off penalties, no hidden costs and no hidden traps. It should be backed by a solid, "A" rated lender. No one wants surprises at the closing table and that is your broker's responsibility.
Q. Ok then, how do I pay these costs?
A:
You can pay for these costs, one of three ways. Keep in mind that no one gives them away and does this work for nothing. Don't be misled when someone tells you they do loans for free! If it sounds to good to be true...it probably is.
1st - You can simply pay the related fees by bringing a Certified Check to the closing and pay them at that time. Your Interest Rate will not change over the life of loan because you are NOT financing the closing costs. In this case your stated loan rate is the same as you're A.P.R.
2nd - You can roll the fees into the loan. (Most loans are done this way.) These fees will only add a few dollars to your monthly payment and you need not bring any money to the closing. In many cases, people want some "cash out" for those unexpected needs. If you have asked for equity money out of your loan and will get a check in the amount you requested. For those who are financially savvy, by adding the fees to your loan, your effective A.P.R. (or Annual Percentage Rate) will go up slightly from the amount of your quoted loan rate. In this case, you ARE financing the closing costs and you're A.P.R. will be slightly higher than your loan rate.
3rd. - You can certainly ask for a "No Cost Loan" but as we have said before there is no such thing. What lenders can do in order to meet your request is to simply increase your mortgage rate (i.e. move you from 6.125 % lets say, to 6.375%. All of the same costs we have described are simply paid by the lender to all of the participants. The money comes from the higher interest rate. Over the life of the loan, this amount can be very large. (This increase can cost you $25,000 or more for the life of the loan.). It is our opinion that this is not the best path to take for most conventional loans.
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