馃攳
Loan Estimate Explained - Mortgage Fee Disclosure - YouTube
Channel: Emmett Dempsey
[0]
- On this video, I'm gonna talk all about
[1]
the Loan Estimate or the LE.
[3]
And we're going to start it right now.
[4]
(rock music)
[7]
Hey, what's going on?
[8]
I'm Emmett Dempsey,
mortgage broker and owner
[10]
of Treasure Coast Mortgage
here in Port Saint Lucie.
[12]
And welcome to another video.
[13]
On this channel we talk
more about mortgages,
[15]
the home buying process,
and some cool things
[17]
around Port Saint Lucie
and the Treasure Coast.
[19]
So if you're new here, please
think about subscribing.
[22]
Okay. The Loan Estimate.
[24]
Okay, now, by now you're
either buying a house
[26]
or you're refinancing.
[27]
You got this big old package,
[29]
either electronically
or on- or mailed to you.
[32]
And one of the most important pieces of
[34]
that disclosure package is
called the Loan Estimate.
[36]
Now, if you haven't gotten
a mortgage in a while,
[38]
you may have heard the
term Good Faith Estimate,
[41]
or something of that nature.
[43]
And I even now I still
talk to borrowers that say,
[45]
hey, give me a Good Faith.
[47]
Well, after August of 2010,
or sorry, October of 2010,
[53]
that document, the Good
Faith Estimate was retired
[56]
and it was combined with
the old Truth-in-Lending
[58]
into the new Loan Estimate.
[60]
So the government decided
to combine these two forms
[63]
that were required, the Truth-in-Lending,
[65]
that used to have your total of payments
[67]
and things like that.
[68]
And also the Good Faith Estimate
[70]
had your settlements charges.
[71]
They combined those into one document
[73]
called the Loan Estimate.
[75]
Now this document, it's good enough.
[78]
It does does the job and tells you
[80]
what your estimated charges are.
[82]
However, there are some flaws in it,
[84]
but I'm going to go to a deep dive
[86]
of a sample Loan Estimate
that the CFPB provides
[89]
and go over every section to look for.
[91]
And then in that video, I'll kind of,
[93]
I'll walk you through some,
[94]
some highlights that
you need to be aware of.
[97]
But your Loan Estimate is a
document that every lender uses.
[100]
So no one has their own
special- special form.
[103]
Like we all have the same form,
it's called a Loan Estimate.
[106]
Okay, so it's every lender,
no matter what channel,
[109]
broker, banker, credit
union, what have you.
[112]
We all use a Loan Estimate.
[114]
So, and that being said,
[115]
and you can use that
same document to look at
[117]
different lenders and
look at different deals.
[119]
And that's what I encourage you
to very much do to make sure
[121]
that you're getting the best deal
[122]
that your family qualifies for.
[124]
So I'm going to go into a deep dive
[126]
into the Loan Estimate for every section,
[127]
to what to look for in a minute,
[128]
but I always want to give you
[129]
the overview of the Loan Estimate.
[131]
And it's an important document
[133]
as you're shopping for your home loan.
[135]
So let's go and take a look at
the Loan Estimate right now.
[138]
Here we go.
[139]
Okay. Here's the Loan Estimate.
[141]
It's a three page document.
[142]
Now this is the sample
provided by the CFPB.
[145]
I wouldn't disclose any of
my client's information.
[147]
So this is just the- a make-believe loan.
[150]
So it's just to show it here.
[152]
So let's go step by step.
[153]
At the top it tells you who the bank is.
[155]
Now I'm a mortgage broker, not a lender.
[156]
So we don't loan money.
[158]
So whoever you decide
to place your loan with,
[159]
that's who it will be.
[161]
The date issued.
[162]
Applicants, that's you guys,
[165]
and the property that you're
buying and refinancing,
[167]
and then the sale price.
[168]
Or price value.
[170]
So, and then here is your loan term,
[172]
the purpose, purchase/refinance,
[174]
fixed rate or adjustable,
[176]
your loan type, you know, FHA,
conventional, VA, et cetera,
[179]
Your loan ID is, you know,
issued by the lender.
[181]
And then right here is a very
important box, is rate lock.
[185]
Now, only a locked Loan Estimate is
[189]
what I consider to be true.
[190]
So a lot of times while
you're out there shopping
[192]
you have to be carefully,
you'll be getting
[193]
unlocked Loan Estimates
that have really rosy terms.
[196]
You need to really push against
it and really verify them,
[199]
that they are what they are.
[202]
So there's that.
[203]
So until your Loan Estimate is locked,
[205]
until it says, yes, your
Loan Estimate is not locked.
[208]
Your rate's not locked.
[209]
Okay.
[210]
Your loan amount,
$162,000, whatever it is,
[213]
3.75 rate.
[215]
And then your principal
and interest payment
[216]
Now right here it says
[217]
"Can this amount increase after closing?"
[220]
This is a throwback to the
old pick-a-pays, you know,
[223]
or pay option arms as they called them,
[225]
where you make a very small payment
[226]
and then your balance grew.
[227]
And so this, this is what discloses it.
[229]
Now, those loans, I haven't done those in,
[231]
you know, 12 years.
[233]
I don't even know of anybody
does that does them anymore.
[235]
But anyway, that's why
this is here to verify,
[238]
can your rate increase?
[239]
So like, if you got an adjustable rate,
[240]
then this would be a yes.
[241]
So depending on which one you choose,
[244]
but this is a fixed rate,
loan amount cannot increase,
[248]
your interest rate cannot increase,
[248]
and your P and I cannot increase.
[250]
However, and then on this loan,
[252]
it asks do you have a pre-payment penalty.
[254]
And most of the loans
that I do do not have one,
[257]
but this one, if there is
one you'll get notified
[260]
yes or no right here.
[261]
Also for a balloon payment and it just-
[263]
there's some specialized
products out there,
[266]
but I generally don't do those.
[268]
Okay. Projected payments.
[269]
You can see there's two columns.
[270]
Now this is usually for a
mortgage insurance drop off.
[273]
And this is what happens here.
[275]
So the principal and
interest is at $82 a month
[277]
of mortgage insurance that
after seven years projected
[280]
will fall off.
[282]
You know, if your house
appreciates faster,
[283]
generally 78% is where it
needs to get to before you
[287]
could apply it to remove
mortgage insurance.
[289]
And this is what it depicts there.
[291]
Now, certain FHA loans
have mortgage insurance
[295]
that stays on the life of the loan.
[296]
Some will fall off after 11 years.
[298]
Depends on how much you put down.
[300]
But it'll tell you right here.
[301]
Okay?
[302]
The estimated taxes,
insurance and assessments,
[303]
basically any HOA for
property taxes, et cetera.
[306]
That's what it will be.
That's what you have.
[308]
And they can increase over time.
[310]
Cause they're not the
purview of the lender.
[312]
Here's your estimated closing costs. Okay.
[315]
And then here's your
estimated cash to close.
[317]
That's the actual money
out of your pocket.
[319]
Okay. Let's break these down further.
[321]
Now the second page has all the fees
[322]
broken into their correct boxes.
[324]
Now Box A is the lender box.
[327]
That's the lender or a broker box.
[329]
These are the fees that
I have influence over.
[332]
Okay. So your points will
buy down your interest rate.
[335]
And I did video on points,
[336]
you can search that on my channel.
[338]
Underwriting fee, that's
usually the underwriting fee
[341]
for the investor that I choose.
[343]
Most of the time I'll, I'll,
[345]
I'll check a box and I'll get
this fee built into your rate.
[349]
But even as a wholesale, you know,
[350]
my rates are still very very good.
[352]
So a lot times you don't
even notice that it's there,
[353]
but that is usually-
they do charge that fee,
[356]
An application fee. Again,
I don't charge any of that.
[359]
Usually your Box A will be clean.
[361]
And then the only thing I have,
[363]
I have- go to section B
[365]
Section B is services you can shop for.
[367]
I have a- usually use a processor, 795,
[370]
so that'll show up here in B.
[372]
Your appraisal fee, credit report, flood,
[374]
these are all standard here.
[376]
Sometimes we call a tax service fee
[377]
and that's to get the
transcription from the IRS, okay.
[381]
C are services you can shop for.
[384]
Generally, your termite,
your survey, you know,
[387]
and your title insurance.
[388]
Now in Florida, usually on most contracts,
[391]
the seller picks the title company
[393]
in exchange for paying owner's title.
[396]
So it's kind of a contradiction
where you can shop for it,
[399]
but you can't shop for it because you,
[401]
cause you're not paying for it.
[402]
So it's kind of a- you
gotta weigh it that way.
[405]
But that's where those
title charges do show up.
[408]
Okay.
[409]
Section E is your recording fee,
[412]
that's that records your, your
mortgage at the local County.
[415]
Now transfer taxes are blank
here, but the state of Florida,
[417]
every loan has transfer taxes.
[420]
It's 0.2% of the loan for intangible tax
[422]
and 0.35% of the loan for doc stamps.
[426]
Now that's on the mortgage.
[427]
Now the seller is usually responsible for
[429]
0.7% of the purchase price
[431]
off of deed transfer stamps,
[433]
and like I said, most of the
time the seller pays that.
[436]
So if you're building a house, you-
[437]
be careful because a lot of times
[439]
the builder does not pay anything.
[441]
Or if you're buying a REO from Fannie Mae
[445]
or something of that nature,
[446]
you gotta be careful who pays what, okay.
[449]
Pre-paids are, you know,
[450]
what needs to be paid
before closing, obviously,
[452]
on a purchase.
[453]
It's generally your pre-paid interest
[455]
and your first year of hazard insurance,
[457]
but this seems to be a little different.
[460]
A lot of times if your
insurance is due within 60 days
[464]
of a refinance closing,
you gotta pay for the year.
[467]
Same thing, if you're approaching November
[470]
and doing a refinance, you
gotta keep that in mind
[471]
because sometimes your
property taxes need to be paid
[474]
because your first payment
will be after November 1st.
[477]
So there's that.
[480]
So your homeowners insurance
[482]
and property taxes for your escrow-
[484]
and this escrow goes to
pay the next year, okay.
[486]
So you have to put more in escrow
[487]
so when the 12 months rolls around,
[490]
you have enough to pay the
next year's tax and insurance.
[493]
Okay?
[494]
For H is Others, so that's
owner's title policy.
[497]
Again, usually paid for by the seller
[499]
and it is coded optional.
[500]
You don't have to get
it, but it's strongly,
[503]
strongly recommended that you do.
[505]
Cause that's the only thing that
[506]
protects you and your ownership interest.
[508]
There's a lenders,
[509]
see a Lender's title
policy protects the lender.
[512]
You know, the owner's title
policy protects you the owner.
[514]
So it's always recommended.
[516]
And again, in most purchase
contracts that I see,
[520]
the seller pays for it,
picks the title, you know,
[523]
that system works out pretty well.
[525]
Okay.
[526]
I is your, all your other
costs, E plus F plus G plus H,
[530]
you know, here,
[531]
and then here's your loan costs.
[533]
So basically your loan
costs and other costs,
[535]
you can kind of weigh that.
[536]
And then D plus I equals $8,054 here.
[540]
Now lender credits, you know,
[541]
if we do issue a lender credit,
bump your interest rate,
[544]
you know, to structure
it in such a way where
[545]
you're getting a large credit,
if you're not, you know,
[548]
you're kind of short on cash and stuff.
[549]
We will take a look at that, you know.
[551]
But that's, you know, any lender
credits, just keep in mind
[553]
are basically for premium
pricing on your rate.
[556]
So there's that. Uh,
Calculating Cash to Close.
[560]
It's your total closing
costs, $8,054 from above.
[565]
Any down payment that you're making, okay.
[568]
And minus your escrow money deposit,
[570]
your funds for borrower,
your seller credits.
[572]
Again, that's for any- anything
that comes from the seller.
[575]
If you get any seller concessions
and this'll total your
[578]
estimated cash to close.
[580]
Okay. So that's page two.
[581]
Page three is just informational stuff,
[583]
mainly for a throwback
to the Truth-in-Lending.
[585]
You have here anything
additional about the loan,
[588]
who your broker is, their license number,
[590]
loan officer, et cetera, et cetera.
[592]
This is what the lender's lender is.
[596]
Okay. Now this is the comparisons.
[597]
Over five years, you've paid
a lot of money in interest
[600]
versus what you paid in principle.
[601]
This is what's disclosed.
[603]
And again, it goes back to
the old Truth-in-Lending.
[604]
Your annual percentage rate, your APR,
[606]
your costs over the loan
term express as a rate.
[609]
This is not your note rate.
[610]
Usually that spread will
determine how quote unquote
[613]
expensive your loan is.
[614]
But there's a lot of APR videos out there.
[616]
check those out.
[617]
Your total interest percentage, you know,
[619]
is the amount of interest
you pay over time
[620]
as a percentage of your loan amount.
[621]
Generally your 30-year
fixed loans will have-
[623]
that tip will be around 60, 60-70%.
[626]
And if you amortize for 20
or 15 that'll be much lower
[629]
because you're just paying more interest
[632]
as a percentage of your total
payment on a 30-year fixed,
[635]
but that keeps your payments down.
[637]
Okay?
[638]
Other considerations talks
about your appraisal, you know,
[641]
you can get charged for it
and you'll get a copy of it,
[643]
et cetera,
[644]
Assumption.
[644]
Most loans these days are
not assumable, you know,
[647]
but some might be.
[649]
And if they do come
back on the market again
[651]
it'll check that they are.
[653]
Homeowners insurance,
[654]
you're required to keep
it on the property.
[656]
And if you cancel it,
[658]
the lender will put it on there for you.
[659]
And it's usually not the best for you.
[661]
Your late payments, again,
if you're 15 days late, 5%.
[664]
Again, it's a throwback
to the Truth-in-Lending.
[667]
You know, I refinanced it again.
[669]
We'll, we'll, we'll recast it.
[671]
And servicing disclosure,
[673]
most loans are transferred to servicing.
[675]
And then your signature, date, right here.
[677]
Okay. Welcome back.
[679]
That was a deep dive on the Loan Estimate.
[680]
I know it's a lot of different
sections to keep in mind,
[684]
but just keep in mind that, you know,
[687]
the Loan Estimate is used for you
[688]
to compare different offers.
[689]
Also be careful about using
locked loan estimates.
[693]
Cause if, you know, as I
said in the video that your-
[697]
if I can give you a Loan
Estimate that says anything,
[699]
but if it's not a locked Loan Estimate,
[701]
and then that lenders are held to it.
[702]
So definitely, if you're out
there shopping for a home loan,
[706]
definitely give me a call,
show me your Loan Estimate.
[708]
I'll see if I can match or beat it.
[710]
So give me a call, go to
www.dempseymortgage.com.
[712]
Thank you so much for watching
[713]
and I'll see you on the next one.
Most Recent Videos:
You can go back to the homepage right here: Homepage