The Home Equity Protection Act, just like it sounds, is supposed to prevent lenders from gobbling up your precious home equity with high fees. It is a law that limits how much banks and other mortgage lenders can charge you. This is especially relevant when the loan is small, such as the popular Home Equity Loan that many home owners use for remodeling or making home improvements.
Now the Consumer Financial Protection Bureau is raising the limit banks can charge you. Makes you wonder who this government agency is really protecting, doesn’t it?
The fee limit for a home equity loan in 1994 was $400. Last year in 2013, the limit was $625. All loan applications received on or after January 10, 2014 will have an increased fee limit of $1,000.
Of course, it is up to the individual bank and lender to decide whether or not to charge the limit. When shopping for a home equity loan, be sure to ask what the fee is. If they say $1,000, you know they are charging the maximum allowed by law. I advise shopping three lenders before deciding.
For a home equity or other small loan, I would look at a mid-size or small local bank, a credit union, and the bank I currently do business with. Don’t make the mistake of blindly taking the first loan offered.
In addition to the fee charged for a home equity loan, you also need to find out the following:
* Is there a prepayment penalty? If so, what are the terms?
* How does the adjustable rate work? What is the maximum the rate can go up to at the first adjustment? At each adjustment thereafter? The lifetime max?
* Is there an annual fee?
For more valuable information about home mortgage loans, please see Mortgage Rip-Offs and Money Savers.
I recommend the paperback copy over the Kindle, because the Good Faith Estimate forms are too difficult to read in the ebook format.
“If you’re considering getting a mortgage, read this to see what’s going on behind the scenes.” Posted November 8, 2013 by Lovelylight, user name