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Proposed New 1-Page Mortgage Disclosure Forms
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The Consumer Financial Protection Bureau released two drafts of a proposed mortgage disclosure form that would make understanding your mortgage a lot easier. You can take a look at these forms for yourself.
This is long overdue. I’m all for simplifying using charts and graphs in a standardized way, not whatever way the mortgage lender felt like showing it. It also makes for a more informed and educated consumer. You can’t look at this form and not understand that, should you get an ARM, your payments could jump in the adjusting year (and each year afterwards). It also gives you a better understanding of the other costs, like taxes and insurance, which the mortgage lender may neglect to show you (though I doubt they ever do).
I don’t, however, think this is a panacea nor would it have prevented the “mortgage meltdown” that started a five years ago. I’ve always seen the home buying process as one of the most significant financial things you can do as an adult. If you’re going to be spending all that money, you should be taking the time to understand your mortgage even if it means wading through pages of documents. When we bought our house and signed ourselves to a liability of $230,000, I made sure to every last sentence of every document until it made sense. You are either a customer who does that or one who doesn’t. If you’re in the second group, this standardized form is a nice way to make sure everyone understands the basics but it won’t necessarily solve the root problem.
The two forms aren’t very different, just a reordering of information, but I have a slight preference for Form A (Ficus Bank).
What do you think of these forms?
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Simple enough. I’ll be starting the first time home buying process in the next few months. Those forms are definitely easy to read.
I think Form B is easier to understand and clearly illustrates the varying payment amounts that are possible throughout the life of the loan. Yes each person SHOULD take the time to read all of the pages, but reading and understanding are very different. This cover page would help to break down some of the most complicated financial transactions that people undertake.
I agree with you one hundred percent. This is long overdue, but it’s not going to save the day for everyone. We still can’t predict the future.
I love it
and think it should be a standard for everyone to use. I was lucky enough because my mortgage company (prosperity mortgage) had their own template which was one page as well and very easy to read. They also presented three different mortgage scenarios that i could choose from and all the information related to each choice.
I agree that this wouldn’t help people stay out of trouble. Ppl will always fool themselves and make false assumptions about the future.
Buying a house is weighty business. I agree with you — if I were buying a house I would read every line and make sure it was comprehensible. It is one of the biggest decisions of your life — you had better know the financial consequences!
Unfortunately, most people don’t take the time to understand.
I agree completely. I think a lot of people just sign on the line and don’t bother to consider the consequences. I don’t think this would have done much to stop the mortgage meltdown either because there was just too much greed. The mortgage brokers got their money, the people got their house and I don’t think a simpler form would have stopped the greed.
I would love these to be available for consumers to take to closing with them and fill them out with the agent before signing anything…
I’m just going to pay cash…the easiest of all options & doesn’t make the bank any money…
i do think this is a good idea, but i am still baffled when i think of how many people, more or less, just signed on the dotted line. for most people, purchasing a house is the major money decision they may make in their lifetime. i simply do not understand how one can just sign a document like that without reading and understanding each and every line.