Your Mortgage rights in Michgian

If you are getting a mortgage in Michigan, you have clearly spelled out rights. Since I only arrange financing in Michigan (I mostly do mortgages in Ann Arbor), I don't know how other states handle it. But Michigan's Borrower Bill of Rights is very robust:

1. You have the RIGHT to shop for the best loan for you and compare the charges of different mortgage brokers and lenders.



2. You have the RIGHT to be informed about the total cost of your loan including the interest rate, points, and other fees.



3. You have the RIGHT to obtain a "Good Faith Estimate" of all loan and settlement charges before you agree to the loan or pay any fees.



4. You have the RIGHT to know what fees are nonrefundable if you decide to withdraw your loan application.



5. You have the RIGHT to ask your mortgage broker to explain exactly what the mortgage broker will do for you.



6. You have the RIGHT to know how much the mortgage broker is getting paid by you and the lender for your loan.



7. You have the RIGHT to ask questions about charges and loan terms that you do not understand.



8. You have the RIGHT to a credit decision that is not based on your race, color, religion, national origin, sex, marital status, age, or whether any income is derived from public assistance.



9. You have the RIGHT to know the reason if your loan application is turned down.



10. You have the RIGHT to receive the HUD settlement costs booklet "Buying Your Home"."

If you are shopping for a mortgage in Michigan you need to get this from your lender or broker (loan originator), and you need to make sure that they address all of these points.

I think that the two items on this list that an Upfront Mortgage Broker addresses directly are items 2 and 6. Both of these items require your loan originator to disclose how much they are making, and how they are making it. Why should you, the consumer, care how much your loan originator is making? Most brokers and bankers would argue that it is none of your business. You are getting a rate you are happy with, why should you care how much your broker makes? Because the rate, points, and fees directly impact how much the loan originator is making. Or put another way, your originator makes more if your rate is higher. And frequently originators will charge points on a lower rate. This is the problem with utilizing the "best interest rate" mentality when shopping for a loan. A loan originator will see you coming a mile away, and disguise their income has points, or as "junk fees". My advice is to make sure the mixture of points and originator fees totals less than 2% of the loan amount. Your originator is required to give you a Good Faith Estimate (GFE) within 3 days of application. This is a federal law.

Now, some of the fees on a (GFE) are not the originator fees. Taxes, title fees, appraisal, and survey fees are generally not included as part of the 2%. But make sure your originator explains what counts as his compensation, and what fees are merely the cost of doing business.