Psssssst, hey pal, you want some inside info to give you an edge when working with your mortgage lender? Alright, but you didn't hear this from me!
The government has been all up in the mortgage business over the last few decades and this has been magnified over the last 5 years or so. I will be the first to say that consumer protection in any situation is of utmost importance, but at the end of the day, only a very small handful of thugs truly try to take advantage of a mortgage consumer. The latest and greatest guidelines created to protect have turned out to confuse and open up other doors to potential hazards. The following list is not necessarily information that will help protect you as a consumer against fraud, but more so things that you would not know to ask about or ask for that can help you in a couple of areas.
1. Make sure you ask for and receive your good faith estimate and truth in lending forms within the required 3-day window from when you made application; this requirement has not gone away. Now this concept is not a new secret or change, but the good faith estimate form itself is. The new form was supposed to make expenses easier for you to understand, but it is actually a step in the wrong direction. What you need to be sure you are asking for and receiving in addition to the good faith estimate is a fee sheet. This is basically what the old good faith forms looked like and actually break down the expenses for you. This is very important and something you need to have your loan officer review with you. Do not allow your lender to just provide you with the good faith estimate as it does not give you near enough detail of the dollars you are spending.
2. Keep your copy of the good faith estimate and fee sheet and compare it to your settlement statement. Your lender is now held to much stricter standards when it comes to telling you on the front end of your process what to expect at closing with respect to your closing costs. You have certain expenses that you are able to shop around to see if you can find a vendor with better pricing and your lender must give you this option. (Didn't know about that, did you?!?!) Even more impressive now is there are certain other fees that your lender must end up within a 10% variance of what was disclosed to you upfront when you receive the settlement statement. One fee that is included in this section in the state of Tennessee is the title insurance policy expense. If the lender under estimates or neglects to disclose this fee accurately, there is a specific procedure to go about correcting this. If you get to closing and the settlement statement shows this particular item is more than what you were told it would be or is being charged to you but was left off the good faith estimate, then you must receive what is called a lender cure. This lender cure is a credit from the lender to cover the shortfall of that charge. Lenders are not allowed to just charge you for that expense or the higher amount if it was not properly disclosed to you. This is why I strongly suggest you keep your good faith estimate and truth in lending docs you were sent and compare them to the final settlement statement. Again, your lender MUST cover this expense if it falls outside of the 10% variance of what was disclosed to you upfront.
3. Ask your lender if they will give you a discount on your closing costs. The vast majority of lenders have their own fees added to the other 3rd party charges associated with your mortgage transaction. These lender fees are simply one form of income to the lender. You are NOT hearing me tell you that these fees are fluff or not justified in being charged and basically an avenue for lenders to fleece consumers. What I AM telling you is these are the fees that the lenders have control over and can discount or waive should they be inclined to do so. If when you are shopping for the best lender to work with and one lender has lower fees than another, you will be amazed at what happens when you ask them to match the lower fees and get your quoted APR in line with the other place.(Key point just made! Compare the APRs when negotiating fees so you don't have the fees disappear only to have them covered by your rate) Lenders and loan officers are hungry for as much business as they can get right now, so it does not hurt to ask.
I am happy to consult and/or discuss in further detail if you have any questions.
