Whether its the TIL - Truth in Lending form or the initial escrow account statement, I had to manually prepare both in my day. All of my closers must be able to dissect these forms. I make sure each closer has calculated the aggregate adjustment manually so they fully understand what the figures really mean on the HUD.
If the closer doesn't understand the APR or escrows, how can we expect the consumer to understand them??
I should probably start a school for industry professionals called "Here's how old fogies used to do it." LOL Truly - I'm not kidding. Now that software does everything, very few really know WHAT its doing or why. ;)
Anyway, back to APRs. Here's the comment I posted:
"Great topic. I come from the old school when we had to calculate the APR ourselves. For years I had a cheat sheet label on the back of my HP calculator.
Truth in Lending is not a bad form and it’s really not confusing. The APR is simply the cost of borrowing when you include the interest AND any required finance charges including those paid at closing and those paid during the life of the loan, such as mortgage insurance.
The definitions are pretty clear for which fees are considered finance charges. The differences in interpretations between lenders are usually for insignificant fees such as courier charges. I have yet to meet a lender who doesn’t understand the big ticket items, so unless you have an absolutely unscrupulous lender with intent to deceive a borrower, the TIL is a valid method of comparison shopping.
Even with an ARM, it’s a good comparison. The APR for an ARM assumes that the index will not change at all moving forward. It’s a really good way to compare different ARM products. It allows you to compare margins and rate caps in a way that is fairly easy to understand.
I recommend that all consumers ask for this information and consider it before making their final choice of loan programs or lenders.
Thank you for raising such a good topic."