June is National Homeownership Month, which is the perfect time to let your opinions be heard on how to simplify mortgage disclosures.
If you are like many other Americans looking into buying a home, you are planning on taking out a mortgage. Federal law requires that future homeowners receive two forms when applying for a mortgage loan. The first is a Truth in Lending Form, and the other is a Good Faith Estimate. The Truth in Lending Form lays out the Annual Percentage Rate (APR) on your mortgage, as well as other crucial information including the total amount youâ€™ll pay over the life of the loan, the total number of payments, and when theyâ€™re due each month. The Good Faith Estimate lists all costs that are associated with the mortgage, such as the interest rate and lenderâ€™s fees. In theory, these two forms are supposed to help you figure out which mortgage product is right for you. But often these lengthy forms contain a lot of facts and figures which can leave you with more questions than answers.
In an effort to change this, the Consumer Financial Protection Bureau (CFPB) is combining the two forms into one shorter, simpler form. They developed a program, â€œKnow Before You Owe,â€ which is designed to hear feedback from housing counselors, lenders, and most importantly consumers, to ensure their revised form is easier to understand. The CFPB developed two different drafts, and they want to hear from you as to which version is the most preferred. To view both drafts and provide feedback, visit www.consumerfinance.gov.
To further assist consumers when considering home ownership, the NFCC offers a variety of online calculators including â€œHow Much Home Can You Affordâ€ and â€œWhich Mortgage is Better For Me?â€ which can help you determine what mortgage product can be right for you. For more information click here to access these and other useful calculators to help you with your financial needs.