It discourages loans with balloon features and prepayment penalties and encourages consumers to shop with at least 3 different lenders. The Toolkit appears to reflect a bias in favor of fixed rate loans, a 20% down payment, and HUD counseling. It emphasizes the consumer’s ability to repay and the mortgage payment’s affordability. The Toolkit is focused on the process for purchasing a home and obtaining a purchase money mortgage, and does not address refinances except for a mention at the end. Understand Home Equity Lines of Credit and refinancing.Act fast if you get behind on your payments.This section takes the consumer through the Closing Disclosure and describes the costs shown on it. Understand and use your Closing Disclosure.This section describes the various service providers in connection with the loan closing. This section includes a work sheet that aids the consumer in comparing loan offers. This section contains a table that illustrates how different “points” scenarios impact the monthly payment over the life of the loan. Understand the tradeoff between points and interest rate.This section takes the consumer through the different down payment options and possibility of having PMI on the loan. Choose the right down payment for you.Pick the mortgage type that works for you.Further, there is a worksheet which has the consumer calculate their total monthly income minus all debt payments which in addition to the monthly home payment, has the consumer deduct car payments, student loan payments, credit card payments and other payments such as child support or alimony. There is also a calculation of the percentage of the consumer’s income spent on their monthly home payment. It includes their mortgage payment but also HOA fees, insurance and taxes. This section includes a worksheet for the consumer to calculate their total monthly home payment. The Toolkit includes the following topics:
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The goals of the Toolkit are to: (1) inform consumers of the steps they need to take to get the best mortgage for their individual situation, (2) help consumers understand their closing costs and what it takes to buy a home, and (3) give consumers tips on how to be a successful homeowner. However, in the Federal Register notice announcing the Toolkit’s availability, the CFPB encourages all market participants (such as realtors) “to provide the to consumers at any other time, preferably as early in the home or mortgage shopping process as possible.” The Toolkit is designed to be distributed electronically and has interactive worksheets and checklists. Lenders are required to deliver or mail the Toolkit not later than 3 days after receipt of an application. The new booklet is entitled “Your home loan toolkit: A step-by-step guide.” (The booklet it replaces is entitled “Shopping for Your Home Loan: Settlement Cost Booklet.”) The new booklet or Toolkit is designed to be used with the new TILA/RESPA integrated disclosures required to be provided for applications received on or after August 1, 2015. The CFPB has issued an updated version of the home buying information booklet (also known as the special information or settlement cost booklet) required under RESPA and TILA.