Before you sign your new mortgage loan, be sure that your lender or mortgage broker has disclosed their annual percentage rate (APR) and their terms. Lenders are legally required by the Truth in Lending Act to disclose the cost and terms of your financing package before you sign any final paperwork. If a lender refuses to reveal this information, you should find another lender who follows the legal process.
Asking About APR
When you begin shopping to refinance your mortgage, you should ask about the APR along with other fees and rates. The APR includes the total interest, points, and other fees. The APR allows you to make a quick comparison between lenders. However, your APR could be higher if you wish to pay points for lower interest rates.
You can call up individual lending institutions to request this information or use an online mortgage broker. With their websites you will receive offers from several different mortgage lenders. They will list out their rates and fees. You may also find better deals on closing costs or interest rates since online lenders have reduced overhead.
Federal law requires all lending institutions to disclose loan costs and terms before you sign for the loan. Most of the time, lenders will send out the paperwork with your application, but some financing companies wait until the settlement period.
Once you have your loan terms, review them carefully. The mortgage terms will include information on finance charges, payment schedule, and APR. You also have the right to cancel your loan within three business days after settlement or receiving your Truth in Lending disclosures, whichever occurs last.
Inquiring About Application Refunds
While you have the right to rescind on your home loan, you may forfeit your application fee depending on the lender. Application fees for processing your loan usually total $100 to $200, which is paid with your application. All other loans fees are required to be refunded if you cancel your loan within the three days of closing.
Some lenders do not refund application fees if you cancel or are not approved. Before you apply, it is best to ask about refunds along with rates and fees.
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Written by: Carrie Reeder