FOR IMMEDIATE RELEASE
A TIP IS NOW REQUIRED WITH YOUR HOME MORTGAGE LOAN
Minneapolis, MN, October 3, 2015 –
Effective immediately, by consumer demand, a TIP is now required when you obtain a home mortgage loan. Borrowers knew that obtaining a home mortgage loan was expensive, but effective October 3rd, 2015 – the cost is magnified. Regulations have placed a magnifying glass over the cost of borrowing. Those changes have helped borrowers see the cost of borrowing in a new, clearer way using total interest percentage.
Previous home buyers may remember a big, scary number on their mortgage loan paperwork. That number is officially known as “Finance Charge”. Finance Charge is defined as: “The dollar amount the loan will cost you”. Now Finance Charge is being utilized in a new way.
Total Interest Percentage
There are two new figures to represent the cost of borrowing: “In 5 Years” and “TIP”. “In 5 Years” is a dollar amount – the TOTAL cost over five years (including Principal, Interest, Mortgage Insurance and Loan Costs). “TIP” or the Total Interest Percentage is part of the new disclosures that take place of some familiar disclosures (for previous home-buyers). The TIP uses the Finance Charge and divides it by the loan amount to determine the Total Interest Percentage paid over the life of the loan. In other words, the TIP expresses: “The total amount of interest that you will pay over the loan term as a percentage of your loan amount.” For example, if the borrower is obtaining a loan for $100,000, and over the life of the loan, the interest costs are $75,000 – the TIP would be 75%. If that same loan has interest costs of $80k, over the life of the loan, the TIP would be 80%. Since the TIP represents the total interest costs over the entire life of the loan, the TIP will generally be a higher percentage figure. The TIP is not the interest rate or the Mortgage APR (Annual Percentage Rate). (For more information on Mortgage APR, see APR.MLSMtg.com.) The loan’s interest rate and APR are both expressed as annual rates. On the other hand, TIP is not an annual rate, but an all-encompassing, over the life of the loan rate. TIP will be found:
At the beginning of the mortgage loan process, instead of receiving the Initial TIL Disclosure and the Good Faith Estimate, borrowers will receive a new “Know Before You Owe” Loan Estimate. On the Loan Estimate, the TIP is found on Page 3 under “Comparisons”.Mortgage TIP – Total Interest Percentage on Loan Estimate Disclosure
MLS Mortgage Group is a local, Minneapolis Mortgage Broker with access to many different lenders with varying rates and programs. We have partnered with REALTORS® since the beginning to ensure a positive home buying experience. MLS Mortgage Group is passionate about the community and “keeping it local”. Phone number: 612-789-LOAN (5626).
Eric House, Mortgage Loan Originator
MLS Mortgage Group
Press Release PDF: TIP IS NOW REQUIRED WITH YOUR HOME MORTGAGE LOAN – Oct 3 2015
For more information on TIP, please see New Mortgage Rules – Know Before You Owe