Article Courtesy of signonsandiego.com
November 30, 2011
Written by Lily Leung
Shoppers, I bet many of you scoured the Sunday ads and bounced to several stores for deals over Thanksgiving weekend.
What if you applied that same effort and vigilance to shopping for a new home loan or refinance? That same attention to detail could translate into hundreds to thousands of dollars in savings over time.
“People think nothing about going to many different stores to buy a toaster or oven or dishwasher,” said Norma Garcia, attorney at Consumers Union, publisher of Consumer Reports magazine. “They just don’t shop for (home) loans the same way they shop for other products, but they ought to.”
Consumers likely are more comfortable comparison-shopping for microwaves than mortgages because the home-loan process can be cumbersome, with reams of paperwork, unfamiliar jargon, and of course, the rush to close and move to a new place.
The U.S. government is working to make the process easier. Since May, officials have been trying to simplify and combine two required forms that show would-be borrowers their final loan terms and costs before closing. The “Know Before You Owe” campaign, spurred by sweeping financial reforms in 2010, has produced two drafts of the merged documents that are still in testing phase.
“Anything that will make it simpler and easier for borrowers is a step forward,’ said Polyana da Costa, a mortgage reporter at bankrate.com. “They’re trying to get rid of the legal and technical jargon that many borrowers don’t understand.”
Appraisers also have shown their support for borrowers. Appraisal Institute, a 25,000-member professional group, opposes one of the revamped forms because it continues to lump together fees paid to the home appraiser and the appraisal management company, a third party sometimes used by lenders to assign, manage and deliver finished appraisals. The average amount paid, $400 to $500, is usually split between both parties but is routinely shown as one line item.
“We believe that consumers deserve to know who is providing services relative to their loan and how much was paid,” says a Nov. 16 letter from the group to the Consumer Financial Protection Bureau, the agency leading the mortgage-paperwork makeover.
The group added: “This is the spirit of transparency and the core presumption with development of a consumer disclosure form.”