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From the category archives:

Procedure

August 22, 2009

Truth in Lending Disclosure

I have always been wondering why we have two different disclosures (TIL and GFE) to serve one and the same purpose… Why can’t it be just one form with all a borrower has to know? The funniest thing, though, is the fact that both The Department of Housing and Urban Development (HUD – the author [...]

August 6, 2009

Settlement Statement (HUD-1)

The recently introduced new Good Faith Estimate (GFE) form triggered certain changes in the settlement documentation chain. Its long-time associate the Housing & Urban Development Settlement Statement (HUD-1) form has undergone a makeover, too. The guidelines for the usage of both documents went into effect on January 16, 2009, but they will become mandatory only [...]

June 27, 2009

The Good Faith Estimate (GFE)

What good is the Good Faith Estimate you received from your potential lender? Let’s see… At first sight, the information provided seems gold – origination fees, appraisal fees, credit report… you name it! And then you get several Estimates from different lenders, and compare, and think that you have made a fair choice until… well, [...]

June 18, 2009

I had the rate of my upcoming mortgage locked, but the APR presented to me a couple of weeks later was already different (obviously higher!) and proclaimed subject to more changes any time before closing. I mean, how is this possible in the first place?

As many other borrowers, you probably got deceived by the APR’s apparent similarity to the interest rate and assumed that “locking the rate” means locking all the rates involved. Unfortunately for borrowers, that is not the case. The APR does not only include the interest rate and the points, which do get locked, but also [...]

May 14, 2009

Annual percentage rate (APR)

The Annual Percentage Rate (APR) was created with good intentions to make complicated things if not simple, then at least simpler. It even works in many cases! Unfortunately, it also fails in just as many other cases, which sort of devaluates it as a universally reliable tool. The APR looks a lot like an interest [...]

April 28, 2009

My broker says she’ll tell me the price of her service upfront and find me a mortgage at a wholesale price. So she is an upfront mortgage broker, isn’t she?

Did she say she was? Anyway, the promises sound very much like the ones of an upfront broker and the easiest way to find out how much truth there is to them is to go to the official site of The Upfront Mortgage Brokers Association (UMBA), use the search tool and see if your broker’s [...]

April 22, 2009

Upfront Mortgage Brokers

The concept of mortgage brokers disclosing the real wholesale mortgage prices to their customers has caught my eye again recently, as it is being promoted by some most respectful mortgage experts and advisors. Some of them sound very enthusiastic about it; some see the panacea for predatory lending in it. Well, there seems to be [...]

March 27, 2009

Steps on the Way Home

A few words about the procedure of getting a mortgage. I have noticed, that a lot of people, especially first home buyers, find themselves pretty much at a loss as to where to start, where to look and who to turn to, if you want to buy a home. Certain details may fluctuate in our [...]

February 25, 2009

There is no FICO score in my credit report!

Strange as it may seem, the score should not be there. This is the biggest disappointment about every credit report, no matter how accurate it is there is no indication of the actual credit score (the FICO score) in it. The report you get reflects your credit activities, it does not give you the magic [...]

February 25, 2009

I authorized my partner to use my card in order to improve her credit score so that we can have a better mortgage later when we are ready to buy a home, but the information on the card usage does not even show on her credit report.

It is a recent change: the authorized user information is not taken into account by the three credit score bureaus any more, so no authorized user can build any score this way. Fair Isaac Corporation’s newest FICO scoring model ignores authorized user accounts when calculating Classic FICO credit risk scores. As it is stated on [...]

February 25, 2009

My report is full of delinquent mortgage payments. Well, I admit I’ve skipped a payment once, but how did it turn into so many?

It is a snowball effect. For example, you skip a payment in May. Delinquency. Then you pay your regular monthly amount in June. However, the system of amortizing a mortgage works in such a way that your June amount is used to pay off the May debt, but then there is no money left for [...]

February 25, 2009

I paid my old delinquency expecting to improve my credit score, but the score dropped instead!

Delinquency stays on the record for 7 years, but its negative power declines with time. Its power declines in any case, but the 7-year countdown for removing it from the record may not start until the delinquency is paid. If your delinquency was old, its significance had been weakened with time. When you paid it, [...]

February 16, 2009

Credit Score

These two painful words and three painful digits… Unfair is another word that you hear a lot next to them. Why unfair? Why do many people feel that their credit score is rather random than calculated according to some consistent rule and/or some common sense? Let’s take a closer look. The Fair Isaac Corporation developed [...]