LOAN DISCLOSURES

Your loan disclosures are sent to you via email, as an Adobe Acrobat PDF file. You should have received them by now, if you have not, please contact brian@getloans.com. These disclosures are illustrative, and are for your review, signature and return. The email we send you will have the address of the Loan Processing Center to return the disclosures. Please consider using an overnight mail service to return the disclosures, as they are important, and at times the US Postal Service has lost packages. You may want consider returning the signed disclosures along with all of the supporting documentation from the Application Checklist, in the same overnight package.

Below is a review of what each disclosure is for.

1. LOAN APPLICATION

   The first disclosures you receive in the packet are usually a copy of the loan application that you completed online. This is simply for your review and signature. Sign the top of page one, no signature on page two, sign the bottom of page three, and sign the bottom of page four. Even if page four is blank, that page needs a signature. Feel free to strike through the blank space with a line, if that makes you feel more comfortable signing a blank page. If you see anything that is incorrect or missing, please make the correction or addition in ink pen, and initial the change or addition.

2. GOOD FAITH ESTIMATE

   The next disclosure is usually the Good Faith Estimate. This will be an estimate of all the costs, from all parties in the transaction. We itemize all costs charged by the bank, mortgage broker, title company, city, county, state, appraiser, credit bureau, etc. Keep in mind these costs are only estimates, and the final figures may vary. Below is an itemization of the line item charges that you will usually see:

   801 Origination Fee due lender: This is a fee we do not charge when you do a zero point loan, which makes up the vast amount of loans we do. If you decide to pay discount points on a loan, then you may pay an Origination Fee to the bank.

   802 Discount Points: Most loans we do have zero discount points. Discount points are points paid to "buy down" the interest rate. Each point is one percent of the loan amount. Paying points will get you a lower interest rate. Since you are simply paying interest in advance, you get to write off as a tax break the payment of any points. However, most people do not pay points because the recapture period is often around 4.5 to 5 years. In other words, you have to figure how much you are spending in discount points, how much the lower interest rate saves you in monthly payments, and then figure out how long it will take you to recapture the cost of the discount points with the monthly savings of the lower interest rate. Hence, while it is nice to get a lower interest rate, you need to plan to be in the home for the longer run to make the points pay off in an attractive amount.

   803 Appraisal Fee: You are required to pay the appraisal fee in advance. When you do pay the appraisal fee in advance, the money that you paid will be shown in parentheses, and will not be carried over to the column that itemizes what you owe. It is listed to let you know what you did pay for the appraisal, not to show that you have to pay that fee again. If you see your appraisal fee in parentheses which shows that you have already paid that fee, but still see an additional amount in the column that is totaling what you owe, then you may owe an additional amount on your appraisal. For example, if the base appraisal cost is $350, but you are buying an investment property there is a Fannie Mae/Freddie Mac requirement to include a "comparable rental schedule" which shows market rents for the property. These comparable rental schedules are usually another $100 to $150; and you may see this fee on top of what you have already paid. Another example of this would be where you paid your base appraisal fee, for example $350, and you still see a balance owing of another $250 in the column. Your property may be a two unit property, which is a $600 appraisal fee, for example, so the $350 fee you already paid would still be short $250.

   804 Credit Report: You are required to pay the credit report fee in advance. When you do pay the credit report fee in advance, the money that you paid will be shown in parentheses, and will not be carried over to the column that itemizes what you owe.

   808 Tax Service Contract: This is a fee charged by the bank, which covers the administrative and setup costs of setting up your property tax escrow. A lender requires research of the records of the Registry of Deeds for the county/city in which the property lies. Each property is reviewed to confirm that the taxes are paid in full and up to date.

   809 Underwriting Review Fee: This is a fee charged by the bank, which covers the costs of underwriting and approving your loan.

   810 Administration Fee: This is a fee charged by the bank, which covers the administrative, handling, and preparation for preparing the closing documents for settlement.

   814 Yield Spread Premium: This is the revenue that the bank pays to the mortgage broker for brokering the loan to them. It is not a fee paid by you; as such the amount is in parentheses and is not in your column of fees.

   816 Origination Due Broker: This is a fee we do not charge when you do a zero point loan, which makes up the vast amount of loans we do. If you decide to pay discount points on a loan, then you may pay an Origination Fee to us for brokering the loan to the bank.

   820 Document Preparation Fee: This is a fee charged by the mortgage broker to cover the costs associated with processing the loan, submitting the loan for approval to the bank, and helping the bank prepare the documents for the loan closing.

   821 Flood Certification Fee: Federal law requires that you obtain flood hazard insurance if your property lies in a flood zone. As part of the bank's evaluation of your property, they engage a flood determination company to tell them whether or not the house is located in a flood zone. The flood certification fee covers that cost. If your house is located in a flood zone, you will be required to purchase Flood Insurance.

   901 Prepaid Interest: This is per diem interest due on the new loan from the date of funding the loan to the end of the month that the loan closes in. If you close early in the month you will owe more interest, if you close later you will owe less. Please keep in mind that you will have one month without a mortgage payment after closing. So if you close January 15, your first regular payment will not be until March 1st.

   903 Hazard Insurance Premium (also known as homeowners insurance): A lender will require you to insure the property you are buying, since the property is the collateral for the loan. At the time of closing you must pay the entire first year's premium. We are only estimating the amount of the premium, and every borrower will choose their own insurance provider. You must pay this premium five days prior to closing, and get a copy of the policy and paid invoice to us. You are paying a certain number of months of hazard/homeowners insurance in advance, for the bank to set up your impound/escrow account, to pay future premiums.

   904 Flood Insurance Premium: If your property is in a flood zone flood insurance may be required. It is paid by the borrower and insures the borrower and lender against certain losses in the event of a flood. You would be required to pay the first year's premium in advance.

   1001 Hazard Insurance Impounds: Impounds (also known as escrows) may be required on loans with a Loan to Value (LTV) over 80% (which means you have less than a 20% down payment). The bank typically requires two months of the annual insurance to be placed into escrow. This means you will have paid the first year's premium, plus two months, in advance. The banks require you to pay in advance on hazard insurance (as well as property taxes). Hence, when you sell the home, you will be due a refund of the amounts you have sitting in the escrow account.

   1002 Mortgage Insurance Impounds: Most of the loans we do will not require any mortgage insurance. If for some reason you do a loan that requires mortgage insurance, you will usually be obligated to put two months of the monthly payment into an escrow/impound account at closing.

   1003 and 1004 Property Tax Impounds (for City/County): This is an estimated amount necessary to set up your escrow account. Your property taxes are being estimated at this point, and may be high or low in this assumption. Your title company will provide us with the final (and accurate) amount due prior to closing. The same principal applies to property tax impounds, as for homeowners insurance. You are paying a certain number of months of property taxes in advance, for the bank to set up your impound/escrow account, to pay future property tax bills.

   1006 Flood Insurance Impounds: If you buy a home that requires flood insurance, you will usually be obligated to put two months of the monthly payment into an escrow/impound account at closing.

   1101 Settlement or Closing Fee: The fee paid to the settlement company (also known as the title company, or title & escrow company) for handling all the financial transfers and payments associated with the transaction. We have estimated the fee, but it is set by the settlement company your select.

   1102 Abstract or Title Search Fee: The fee the settlement company charges for performing your title search. Most settlement companies will require the title history on your loan to be reviewed before they can issue a new title policy.

   1103 Title Examination Fee: Administrative fee charged by the settlement company.

   1104 Title Insurance Binder: Administrative fee charged by the settlement company.

   1106 Notary Fee: Several documents you sign during the loan must be notarized.

   1108 Title Insurance: This guarantees that your home has no other liens on the property and guarantees your undisputed ownership. All lenders require that you have title insurance on the home. You will learn more about title insurance later in the transaction.

   1201 Recording Fee: To create a public record of your legal ownership of the property, the lenders notify the county government to record the transaction. The recording fee, which varies by state, is paid to the county/city.

   1202/1203 City/County Tax/State Stamps: Tax stamps, affixed to the deed, showing the amount of recordation and/or transfer tax paid. Some collect a recordation tax anytime a new mortgage is recorded, even on a refinance.

   1301 Survey: A property survey is usually required when getting a mortgage loan. Sometimes a "recertification" of a property survey is acceptable. It should be noted that the typical property survey that is provided at a settlement only shows the location of the house on the lot. The survey will assist the purchaser in determining whether fences, trees or other such objects are properly located within the property being conveyed.

3. FEDERAL TRUTH-IN-LENDING STATEMENT

   ANNUAL PERCENTAGE RATE (APR) This is the measure of the cost of the credit/interest rate. The APR is not the same as your interest rate. The APR includes items in addition to interest, so it is higher than the note rate. It is a combination of the amount of interest to be paid over the life of the loan, together with the prepaid finance charges, computed as an annual rate. It is supposed to help reflect what your closing costs are. ItÕs supposed to give the consumer a measure to see if they are getting overcharged for closing costs. For example, if someone quoted you a great 6% interest rate with 0 points, but you saw a 6.89% APR, you would know you were getting charged too much on closing costs, or perhaps even that there are hidden closing costs. The APR is usually only slightly higher than the Note Rate, which is the actual interest rate you will pay on the money you borrow.

   FINANCE CHARGE This is the cost of the loan to you over the term of the whole loan (not including the principal amount of the loan). It is a combination of the amount of interest paid over the life of the loan plus any/all mortgage insurance premiums, plus the prepaid finance charges/points.

   AMOUNT FINANCED The amount financed will always be different from what you borrowed. The amount financed represents your new mortgage amount minus points and certain closing fees as shown in your Good Faith Estimate of Closing Costs. The Amount Financed is the loan amount applied for less the prepaid finance charges. Prepaid finance charges can be found on the Good Faith Estimate. For example, if the borrower's loan is for $100,000 and the Prepaid Finance Charges total $5,000, the amount financed would be $95,000. The Amount Financed is the figure on which the Annual Percentage Rate is based.

   TOTAL OF PAYMENTS This represents the total dollar amount of principal payments, the mortgage insurance (if applicable), and the total interest of the loan.

   PREPAYMENT If the first box is checked, your loan has a prepayment penalty. This means that a fee may be charged to you if you pay off your loan before it is due. The second box indicates that if you pay the loan off early you have no prepayment penalty, whether you pay the loan off in its entirety or if you choose to prepay extra month to month. And you will not receive a refund for interest that you paid in the previous years (of course you would not expect to be refunded for interest you already paid), and you will not owe any future interest if the loan is paid off early in its entirety (which is also obvious, because once the loan is paid off early and ceases to exist, there can be no interest charged on it).

   ASSUMPTION Your lender will determine if the loan is assumable (transferable with no change in rate or conditions) by a third party. Very few mortgages are assumable.

4. BORROWER'S CERTIFICATION & AUTHORIZATION In this form, you are certifying that all information you have stated and supplied is accurate. It is also permission for the mortgage broker/company to contact employers, banks, credit bureaus, property management companies, etc; for information needed necessary to process and approve the loan application.

5. HOUSING FINANCIAL DISCRIMINATION ACT, FAIR LENDING NOTICE. This form simply states that it is illegal to discriminate for any reason.

6. EQUAL CREDIT OPPORTUNITY ACT NOTICE. This is another form that states it is illegal to discriminate.

7. RESPA SERVICING DISCLOSURE: This disclosure tells you that your loan may be transferred to another lender. Since we are a mortgage broker and do not retain loans there is a 100% chance that your loan will be transferred to a bank.

8. MORTGAGE BROKER FEE DISCLOSURE This form discusses the nature of the mortgage broker relationship to the borrower. It also discusses the nature of the compensation from the bank to the mortgage broker. It primarily recognizes that we act as an independent contractor, and not as your agent. It states we have entered into numerous agreements with many banks, but not with every single bank in the marketplace.

9. NO INCOME VERIFICATION. This disclosure talks about the different documentation types of a loan.

10. NOTICE TO APPLICANT OF RIGHT TO RECEIVE COPY OF APPRAISAL. This form tells you that you have a right to get a copy of your home appraisal. We send a copy of the appraisal out to you automatically at the end of the transaction.

11. PRIVACY POLICY DISCLOSURE. This form discloses our policies on protecting your personal information.

12. NOTICE TO THE HOME LOAN APPLICANT CREDIT SCORE INFORMATION DISCLOSURE. This form says that we must disclose to you your credit score.

13. REQUEST FOR COPY OF TAX FORM (Form 4506) The reason lenders want a Form 4506 is to review a tax return in the event a loan package is audited, which is something that might happen if the loan is sold. The form 4506 is more of an anti-fraud measure. The form is usually not used unless the loan goes to default or foreclosure. They check the 1040's or W2's on file at the IRS, against the ones you provided, to see if they are the same and to see if any fraud occurred. All you do is sign this form; you do not fill it out or attach a check. If you default/foreclose, then the bank that is servicing the loan at that time will fill out the rest of the form and send the check, and get your tax forms from the IRS for review as part of an audit.

14. BROKER AGREEMENT This form recognizes that the mortgage broker is working to obtain a loan for you, and it reviews the fees the broker charges. These fees were already disclosed on the Good Faith Estimate, they are not extra fees.

15. FINANCING AGREEMENT This is the form that shows you if your interest rate and terms are "locked-in". If your interest rate is not locked-in, the form will review what the terms may be at that time, but there will be no lock-in expiration date listed if the interest rate is not locked-in. If your interest rate is locked-in, the terms will be spelled out, and the lock-in expiration date will be listed. You will have to go to settlement on your loan/home by midnight of the lock-in expiration. If your lock-in expires on a weekend, you have until midnight of the following business day.