Would A "Shopping Sheet" Help When Buying A Home?
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Would A "Shopping Sheet" Help When Buying A Home?

Many potential home buyers say they are confused by mortgage papers given to them by lenders and banks when they apply for a mortgage loan. The federal government is hoping to reduce the amount of confusion with new "shopping sheets."

Have you ever wished that comparing mortgages between lenders and banks was easier? The federal government thinks comparing mortgages should be easier and, as a result, has put a consumer watchdog on the case. That watchdog – the Consumer Financial Protection Bureau – has released an easier way to compare mortgages in a “shopping sheet” format.

In fact, the bureau has released two samples of a “shopping sheet” that lenders would be required to provide buyers when they come to them looking for a mortgage loan. These sheets would need to include information to help compare their mortgage product with other mortgage companies, including the amount of monthly payments, mortgage rates, closing costs and more. In addition to that, this information must be presented in bold type and in an easy to read format rather than the “fine print” that may have been the norm in the industry. These shopping sheets will also be required to have basic information on the first page and then go into more detail on the second page.

According to Elizabeth Warren, the White House and Treasury adviser who was put in charge of this watchdog group, the simpler forms will help home buyers be able to answer some basic questions before they delve into committing to buy a home. Those two questions are: “Is this the best deal that I can get?” and “Can I afford these terms?”

In the current system, mortgage lenders are required to give potential buyers two forms within three days after the buyer applies for a mortgage. These forms include the Truth in Lending form and the Good Faith Estimate document. However, these forms are still confusing for many buyers because of their overlapping information and their cluttered presentation of the information. According to Mike Anderson of the National Association of Mortgage Brokers, these current forms do not tell buyers the cost to expect to pay at closing, which is something that a large number of buyers do not consider when buying a home.

The new forms proposed by the government have a total of two pages as opposed to the current five pages that buyers get now. As a result, the information provided on these new forms should prove to be more concise. They will be tested in a few markets before being released for widespread release. Those test markets include Springfield, MA, Chicago, Los Angeles, Baltimore, Birmingham, AL and Albuquerque. Warren said the bureau is going to consider comments by customers and adjust the sheets accordingly to make them as easy to understand as possible. The testing is scheduled to end in September when the bureau will address the issues that are brought up between now and then and finalize the forms.

Do you think you could benefit from one of these simpler, easy to read forms?

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