Consumer Questions

What are the Questions you should ask?


Q.	What is the difference between an "A" quality loan or a SubPrime loan?
A.		"A" quality loan will usually earn the lower interest rates in the market. To earn the "A" quality standard your credit payments are on time, your employment history is stable and your assets are sufficient enough for downpayment, closing costs and reserves.
A.		A SubPrime loan is Risk Based. The higher the risk because of credit ratings, employment stability or lack of assets the higher the interest rate and fees or lower loan to value.

Q.	What is an A.P.R. ?
A.		A.P.R. stands for Annual Percentage Rate. This is not the note rate or interest rate. APR is cost of the interest rate, closing costs and any points paid by the borrower over the life of the loan.

Q.	How is the interest on my monthly mortgage payment calculated?
A.		Take the mortgage balance times the interest rate and divide by 12. The result is the amount of interest due for that month. Example: $100,000 mortgage x .0800 (interest rate) / 12 = $666.66 interest due)

Q.	What is Section 32 or High Cost Mortgage?
A.		Section 32 is part of the Truth-In-Lending Act better known as Section 226.32 of H.O.E.P.A. (Home Ownership Equity Protection Act) and was written to protect consumers who are refinancing from paying "High Costs" without their knowledge.
A.		There are two measures to find out if you have a section 32 mortgage: If the prepaid finance charges on the Truth-in-Lending (TIL) disclosure are 8% , or above, of the amount financed (box in the top center of the TIL) you have a section 32 loan. If the A.P.R. on the T-I-L disclosure is 10%, or more than the average Amortized T-Bill (determined by the amortization period of your mortgage, i.e. 30years 15 years) you have a Section 32 loan.

Q.	Should I Float or Lock my Interest Rate and Fees?
A.		It is your decision only whether to float or lock your interest rate and fees. By floating your rate and fees you are subject to market conditions and you take the chance of your rate being higher, lower or staying the same. Locking your loan... You must inform your loan officer Receive a Loan Lock Agreement which shows your interest rate, points and when the lock is going to expire. If you do not close your loan by the expiration date you are not guaranteed the interest rate or fees. Lock in Periods (the following are the most common lock periods but there may be others offered by your mortgage company). The longer the lock periods the higher the cost: 10, 15, 30, 45 or 60 days. Usually anything longer than 60 days may require an upfront rate guarantee fee

Q.	Are all loan officers and broker companies alike?
A.		Companies that belong to the Illinois Association of Mortgage Professionals (IAMP) have signed a commitment of ethical and fair lending standards.
A.		Ask for a loan officer that has a CRMS or CMC certification.
A.		Loan officers and companies that have committed fraud or wronged the consumer may be reported to the Office of Banks and Real Estate (the regulatory agency).

Q.	Who do I file a complaint with if I feel that I have been wronged?
A.		Please see our Report a Loan Officer or Mortgage Company page.

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