| You should be aware that there
are several federal laws that provide you with
protection during the processing of your loan.
The Equal Credit Opportunity Act, the Fair Housing
Act, and the Fair Credit Reporting Act prohibit
discrimination and provide you with the right
to certain credit information. For more, you can
turn to the web site of the Consumer Information
Center of the U.S. General Services Administration.
Once you have applied for the loan, the mortgage
lender or broker must soon take certain steps:
Truth-in-Lending law
The annual percentage rate, or APR, of the loan
must be disclosed to you within three business
days of when you apply for the loan. This is the
rate you will actually pay for your mortgage after
all the lender fees have been factored in, which
is generally higher that the stated or advertised
interest rate. It is a good idea to ask for the
APR of the mortgage interest before applying for
the loan.
Good faith estimate
This is a detailed list of estimated closing which
the lender must also provide to you within three
business days of applying for the loan. The best
approach is to request this list before choosing
a loan. For more, see section on the good faith
estimate.
• Tip: Keep your good faith estimate and
compare it to the final list of closing costs
and ask your lender about any changes. Keep track
of everything you pay in connection with the mortgage
application and getting your house and loan, and
be sure those payments have been credited to you
at the closing.
Servicing disclosure statement
Federal law requires the lender or mortgage broker
to tell you in writing, when you apply for a loan
or within the next three business days, whether
it expects that someone else will be collecting
the payments or servicing your loan.
Then what?
Processors in the mortgage bank or company will
organize your paperwork and may verify your employment
status, bank balances and other information from
your application. An underwriter reviews all the
information in your loan file to determine if
the application meets lending guidelines. At this
point, the loan is either approved or denied.
In the latter case, see the section what if I
get turned down?
Once all the paperwork is in order, and your
application is complete, the lender or mortgage
broker must let you know within 30 days whether
or not your loan has been approved. With approval,
a lender should give you a letter of commitment,
which is a promise from the lender to make a loan
based on specific terms and conditions.
Once you receive your loan, and you’re
waiting to close on the sale of the home, don’t
go on a shopping spree. The mortgage lender may
do a final check of your credit report or bank
accounts to make sure you’re not assuming
more debt or spending away your cash reserves.
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