Several years ago the U.S. Congress tried to protect consumers from a few unscrupulous lenders by requiring all lenders to calculate and disclose the annual percentage rate (APR) you pay on your mortgage loan. But most homebuyers will learn more by directing their attention to the Good Faith Estimate of Settlement Costs (GFE). Although Congress meant well, in practice the APR is not helpful and may be confusing.

If you are looking for a good way to understand your costs of borrowing and/or to compare one lender's costs to another, the GFE is your best bet. Get your lender(s) to provide a written GFE before you commit your mortgage business. When reviewing a GFE, keep in mind that the lender actually controls only a certain portion of the disclosed costs. Other parties typically control costs of appraisal, settlement, title insurance, recording fees and taxes, survey, and the "prepaid" expenses of homeowner's insurance, mortgage insurance, real estate taxes, etc. Review these origination fees, discount points, etc. and you will have the ability to understand the full costs of your proposed mortgage loan.

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Arlene L. Hauser
Coldwell Banker
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Arlene Hauser has been helping people make good real estate decisions for 24 years. With a proven record of consistent achievement, she is recognized as a master negotiator and a most skilled and knowledgable Realtor. As one of America's NUMBER1EXPERTS™ in the Princeton and Montgomery areas, Arlene Hauser is well qualified to handle all your real estate needs. Call or email her today.

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