4. The GFE & TIL doesn’t really change
The Good Faith Estimate (GFE) and Truth-In-Lending Statement will never lie. Every fee that you will be charged is located on the GFE. If you want to see how many points you are being charged, look for the “Origination Fee” and “Points”. Origination Fee refers to how much the broker/bank is charging you up front to do the loan. This is expressed in both a dollar amount and points (percentage). If you have a loan for $100k, and you paid 2 points in Origination Fees, then the fee would be $2,000. This is known as the “front-end” fee as well. Points is how much is being paid to the broker based on the rate you were given. If you qualified for a 4.0%(lowest rate), but was given a 5.0%, chances are the bank/broker made 1.25% points. That is expressed as $1,250. This is known as the “back-end” fee. Both fees combined can not exceed 4.99% of the loan amount.
The Truth-In-Lending (TIL) statement shows two very important things. It will show your interest rate and APR. Your APR is your interest rate plus your fees express as a rate. I’m sure that is confusing. But let me show you how to understand it. The closer the range between your interest rate and APR are together, the less you are paying in fees. The further they are apart, the more you paying fees. For example, if you have a 3.0% interest rate, and your APR is 3.9%, odds are you are not being charged that much in fees. That my friend is a good thing. However, if your interest rate is 3.0% and your APR is 5.3%, then you are paying a lot of fees. Secondly, the TIL will show exactly how much you will pay for your house with interest. For example, if you took out a $250,000 dollar mortgage, more than likely you will pay between $400,000-600,000 in 30 years depending on your interest rate. Yea, that some scary sh*t, right?
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