WHERE TO GET INFORMATION

WHERE TO GET INFORMATION


Before you actually apply for a loan and pay a fee, ask
for all the information the lender has on the loan you are
considering. It is important that you understand index rates,
margins, caps, and other ARM features like negative
amortization. You can get helpful information from
advertisements and disclosures, which are subject to certain
federal standards.


Advertising


Your first information about mortgages probably will come
from newspaper advertisements placed by builders, real estate
brokers, and lenders. While this information can be helpful,
keep in mind that the ads are designed to make the mortgage
look as attractive as possible. These ads may play up low
initial interest rates and monthly payments, without
emphasizing that those rates and payments later could increase
substantially. Get all the facts.

A federal law, the Truth in Lending Act, requires mortgage
advertisers, once they begin advertising specific terms, to
give further information on the loan. For example, if they want
to show the interest rate or payment amount on the loan, they
must also tell you the annual percentage rate (APR) and whether
that rate may go up. The annual percentage rate, the cost of
your credit as a yearly rate, reflects more than just a low
initial rate. It takes into account interest, points paid on
the loan, any loan origination fee, and any mortgage insurance
premiums you may have to pay.



Disclosures From Lenders


Federal law requires the lender to give you information
about adjustable-rate mortgages, in most cases before you apply
for a loan. The lender also is required to give you information
when you get a mortgage. You should get a written summary of
important terms and costs of the loan. Some of these are the
finance charge, the annual percentage rate, and the payment
terms.



Selecting a mortgage may be the most important financial
decision you will make, and you are entitled to all the
information you need to make the right decision. Don't hesitate
to ask questions about ARM features when you talk to lenders,
real estate brokers, sellers, and your attorney, and keep
asking until you get clear and complete answers. The checklist
at the back of this pamphlet is intended to help you compare
terms on different loans.