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Home , Annual percentage rate, Collateral (finance), Credit note, Equity loan, Home equity, Home equity loan

Home Equity Disclosure Booklet

People’s United peoples.com

Effective June 2021

L0014 06/2021 00

1 EQUITY PLAN CHECKLIST Disclosure Ask your lender to help fill out this checklist.

TITLE PRODUCT* PAGE Basic features for comparison Plan A Plan B SECTION I. Fixed % % When Your Home is on the Line HELOC 2 Variable annual percentage rate % % SECTION II. Important Terms of our Home Equity HELOC 9 • Index used and current value % % Line of • Amount of margin SECTION III. • Frequency of rate adjustments Notice to Mortgage Applicant HELOC, HEL 13

SECTION IV. • Amount/length of discount (if any) Customer Identification Notice ALL 14 • rate cap and floor SECTION V. Length of plan Transfer of Servicing Notice HEL 14 Draw period SECTION VI. SelectLock® HELOC 15 Repayment period Initial *Product: HELOC = Home Equity Appraisal HEL = Home ALL = Home Equity Line of Credit, Home Equity Application fee Loan Up-front charges, including points costs AUTHORIZATION TO OBTAIN CREDIT REPORT Repayment Terms Before you make an application for credit, please note that all applicants must authorize People’s United Bank, During the draw period N.A. (“People’s United”) to obtain a credit report for each Interest and principal payments applicant. The information contained in the report will be used as part of the underwriting process. If you are Interest-only payments unwilling to allow People’s United to obtain a credit Fully amortizing payments report, we cannot start the application process. When the draw period ends SECTION I: WHAT YOU SHOULD KNOW ABOUT HOME EQUITY LINES OF CREDIT Balloon payment? If you are in the market for credit, a home equity plan Renewal available? is one of several options that might be right for you. Before making a decision, however, you should weigh of balance by lender? carefully the costs of a home equity line against the benefits. Shop for the credit terms that best meet your What is a home equity line of credit? borrowing needs without posing undue financial risks. A home equity line of credit is a form of revolving credit And remember, failure to repay the amounts you’ve in which your home serves as . Because the borrowed, plus interest, could mean the loss of your home. home often is a consumer’s most valuable asset, many homeowners use home equity credit lines only for major items such as education, home improvements, or medical bills and choose not to use them for day-to-day expenses. With a home equity line, you will be approved for a specific amount of credit. Many lenders set the credit limit on a home equity line by taking a percentage (say, 75 percent) of the home’s appraised value and subtracting

2 3 from that the balance owed on the existing mortgage. a “margin,” such as 2 percentage points. Because the cost of borrowing is tied directly to the value of the index, it is For example: important to find out which index is used, how often the Appraised value of your home $100,000 value of the index changes, and how high it has risen in the past. It is also important to note the amount of the margin. Percentage x 75% Lenders sometimes offer a temporarily discounted Percentage of appraised value = $75,000 for home equity lines — an “introductory “ rate Less balance owed on mortgage – $40,000 that is unusually low for a short period, such as six months. Variable-rate plans secured by a dwelling must, by law, Potential line of credit $35,000 have a ceiling (or cap) on how much your interest rate may increase over the life of the plan. Some variable-rate plans In determining your actual credit limit, the lender will limit how much your payment may increase and how low also consider your ability to repay the loan (principal and your interest rate may fall if the index drops. interest), by looking at your income, , and other Some lenders allow you to convert from a variable financial obligations as well as your . interest rate to a fixed rate during the life of the plan, or Many home equity plans set a fixed period during let you convert all or a portion of your line to a fixed-term which you can borrow money, such as 10 years. At the installment loan. end of this “draw period,” you may be allowed to renew the credit line. If your plan does not allow renewals, you Costs of establishing and maintaining a home equity line will not be able to borrow additional money once the Many of the costs of setting up a home equity line of credit period has ended. Some plans may call for payment are similar to those you pay when you get a mortgage. in full of any outstanding balance at the end of the For example: period. Others may allow repayment over a fixed period • A fee for a appraisal to estimate the value of (the “repayment period”), for example, 10 years. your home. Once approved for a home equity line of credit, you • An application fee, which may not be refunded if you are will most likely be able to borrow up to your credit limit turned down for credit. whenever you want. Typically, you will use special checks to draw on your line. Under some plans, borrowers can use a • Up-front charges, such as one or more points (one point or other means to draw on the line. There may be equals 1 percent of the credit limit). other limitations on how you use the line. Some plans may • Closing costs, including fees for attorneys, title search, require you to borrow a minimum amount each time you and mortgage preparation and filing; property and title draw on the line (for example, $300) and to keep a minimum ; and . amount outstanding. Some plans may also require that In addition, you may be subject to certain fees during the you take an initial advance when the line is set up. plan period, such as annual membership or maintenance What should you look for when shopping for a plan? fees and a transaction fee every time you draw on the credit If you decide to apply for a home equity line of credit, look line. for the plan that best meets your particular needs. Read You could find yourself paying hundreds of dollars to the credit agreement carefully, and examine the terms establish the plan. And if you were to draw only a small and conditions of various plans, including the annual amount against your credit line, those initial charges would percentage rate (APR) and the costs of establishing the substantially increase the cost of the funds borrowed. On plan. Remember though, that the APR for a home equity the other hand, because the lender’s risk is lower than for line is based on interest rate alone and will not reflect the other forms of credit, as your home serves as collateral, closing costs and other fees and charges, so you’ll need to annual percentage rates for home equity lines are generally compare these costs, as well as the APRs, among lenders. lower than rates for other types of credit. The interest you save could offset the costs of establishing and maintaining Variable Interest rates Home equity lines of credit typically involve variable the line. Moreover, some lenders waive some or all of the rather than fixed interest rates. The variable rate must be closing costs. based on a publicly available index (such as the prime How will you repay your home equity plan? rate published in some major daily newspapers or a U.S. Before entering into a plan, consider how you will pay Treasury bill rate). In such cases, the interest rate you pay back the money you borrow. Some plans set a minimum for the line of credit will change, mirroring changes in the payment that includes a portion of the principal (the value of the index. Most lenders cite the interest rate you amount you borrow) plus accrued interest. But, unlike with will pay as the value of the index at a particular time plus typical installment loan agreements the portion of your

4 5 payment that goes toward principal may not be enough other charges. to repay the principal by the end of the term. Other plans • The APR for a home equity line of credit is based on the may allow payment of only the interest during the life of periodic interest rate alone. It does not include points or the plan, which means that you pay nothing toward the other charges. principal. If you borrow $10,000, you will owe that amount Disclosures from Lenders when the payment plan ends. The federal Truth in Lending Act requires lenders to disclose Regardless of the minimum required payment on your the important terms and costs of their home equity plans, home equity line, you may choose to pay more, and many including the APR, miscellaneous charges, the payment lenders offer a choice of payment options. Many consumers terms, and information about any variable-rate feature. choose to pay down the principal regularly as they do with And in general, neither the lender nor anyone else may other . For example, if you use your line to buy a boat, charge a fee until after you have received this information. you may want to pay it off as you would a typical boat loan. You usually get these disclosures when you receive an Whatever your payment arrangements during the life application form, and you will get additional disclosures of the plan — whether you pay some, a little, or none of before the plan is opened. If any term (other than a variable- the principal amount of the loan — when the plan ends rate feature) changes before the plan is opened, the lender you may have to pay the entire balance owed, all at once. must return all fees if you decide not to enter into the plan You must be prepared to make this “balloon payment” by because of the change. When you open a home equity line, refinancing it with the lender, by obtaining a loan from the transaction puts your home at risk. If the home involved another lender, or by some other means. If you are unable is your principal dwelling, the Truth in Lending Act gives to make the balloon payment, you could lose your home. you 3 days from the day the account was opened to cancel If your plan has a variable interest rate, your monthly the credit line. This right allows you to change your mind for payments may change. Assume, for example, that you any reason. You simply inform the lender in writing within borrow $10,000 under a plan that calls for interest-only the 3-day period. The lender must then cancel its payments. At a 10 percent interest rate, your monthly interest in your home and return all fees — including any payments would be $83. If the rate rises over time to 15 application and appraisal fees — paid to open the account. percent, your monthly payments will increase to $125. Similarly, if you are making payments that cover interest What if the lender freezes or reduces your line of credit? plus some portion of the principal, your monthly payments Plans generally permit lenders to freeze or reduce a credit may increase, unless your agreement calls for keeping line if the value of the home “declines significantly” or, when payments the same throughout the plan period. the lender “reasonably believes” that you will be unable If you sell your home, you will probably be required to to make your payments due to a “material change” in your pay off your home equity line in full immediately. If you are financial circumstances. If this happens, you may want to: likely to sell your home in the near future, consider whether • Talk with your lender. Find out what caused the lender it makes sense to pay the up-front costs of setting up a line to freeze or reduce your credit line and what, if anything, of credit. Also keep in mind that your home may be you can do to restore it. You may be able to provide prohibited under the terms of your agreement. additional information to restore your line of credit, such Lines of credit vs. traditional loans as documentation showing that your has retained If you are thinking about a home equity line of credit, you its value or that there has not been a “material change” in might also want to consider a traditional second mortgage your financial circumstances. You may want to get copies loan. This type of loan provides you with a fixed amount of your credit reports (go to the CFPB’s website at http:// of money repayable over a fixed period. In most cases the www.consumerfinance.gov/askcfpb/5/can-i-review-my- payment schedule calls for equal payments that will pay off credit-report.html for information about free copies) to the entire loan within the loan period. You might consider make sure all the information in them is correct. If your a second mortgage instead of a home equity line if, for lender suggests getting a new appraisal, be sure you example, you need a set amount for a specific purpose, such discuss appraisal firms in advance so that you know they as an addition to your home. will accept the new appraisal as valid. In deciding which type of loan best suits your needs, • Shop around for another line of credit. If your lender consider the costs under the two alternatives. Look at does not want to restore your line of credit, shop around both the APR and other charges. Do not, however, simply to see what other lenders have to offer. If another lender compare the APRs, because the APRs on the two types of is willing to offer you a line of credit, you may be able to loans are figured differently: pay off your original line of credit and take out another • The APR for a traditional second takes one. Keep in mind, however, that you may need to pay into account the interest rate charged plus points and 6 7 some of the same application fees you paid for your cost of borrowing money, stated usually as a percentage of original line of credit. the principal loan amount and as an annual rate. Margin: The number of percentage points the lender adds GLOSSARY to the index rate to calculate the adjustable-rate-mortgage Annual membership or maintenance fee: An annual interest rate at each adjustment. charge for access to a financial product such as a line of Minimum payment: The lowest amount that you must pay credit, credit card, or account. The fee is charged regardless (usually monthly) to keep your account in good standing. of whether or not the product is used. Under some plans, the minimum payment may cover Annual percentage rate (APR): The cost of credit interest only; under others, it may include both principal expressed as a yearly rate. For closed end credit, such and interest. as car loans or mortgages, the APR includes the interest Points (also called discount points): One point is equal rate, points, broker fees and other credit charges that the to 1 percent of the principal amount of a mortgage loan. borrower is required to pay. An APR or equivalent rate is not For example, if a mortgage is $200,000, one-point equals used in leasing agreements. $2,000. Lenders frequently charge points in both fixed-rate Application fee: Fees charged when you apply for a loan and adjustable-rate mortgages to cover or other credit. These fees may include charges for property costs or to provide additional compensation to the lender appraisal and a credit report. or broker. These points usually are paid at closing and may Balloon payment: A large extra payment that may be be paid by the borrower or the home seller, or may be split charged at the end of the mortgage loan or . between them. In some cases, the money needed to pay points can be borrowed (incorporated in the loan amount), Cap (interest rate): A limit on the amount that your interest but doing so will increase the loan amount and the total rate can increase. Two types of interest-rate caps exist. costs. Discount points (also called discount fees) are points Periodic adjustment caps limit the interest-rate increase from that you voluntarily choose to pay in return for a lower one adjustment period to the next. Lifetime caps limit the interest rate. interest-rate increase over the life of the loan. By law, all adjustable-rate mortgages have an overall cap. : If stated in your credit agreement, a , or assignee’s legal right to your property Closing or settlement costs: Fees paid when you close (such as your home, , or bonds) that secures payment (or settle) on a loan. These fees may include application of your obligation under the credit agreement. fees; title examination, abstract of title, , and property survey fees; fees for preparing , Transaction fee: A Fee charged each time a withdrawal or mortgages, and settlement documents; attorney’s fees; other specified transaction is made on a line of credit, such recording fees; estimated costs of taxes and insurance; and as a balance transfer fee or advance fee. notary, appraisal and credit report fees. Under the Real Variable rate: An interest rate that changes periodically in Estate Settlement Procedures Act, the borrower receives relation to an index, such as the prime rate. Payments may a good faith estimate of closing costs within three days of increase or decrease accordingly. application. The good faith estimate lists each expected WHERE TO GO FOR HELP cost as an amount or a range. For additional information or to submit a complaint, you can Credit limit: The maximum amount that may be borrowed contact the Consumer Financial Protection Bureau (CFPB): on a credit card or under an equity line of credit plan. Consumer Financial Protection Bureau P.O. Box 2900 Equity: The difference between the fair market value of the Clinton, IA 52733-2900 home and the outstanding balance on your mortgage plus www.consumerfinance.gov/about-us/contact-us/ any outstanding home equity loans. Index: The economic indicator used to calculate interest- SECTION II: IMPORTANT TERMS OF OUR HOME EQUITY rate adjustments for adjustable-rate mortgages or other LINE OF CREDIT adjustable-rate loans. The index rate can increase or This disclosure contains important information about our decrease at any time. Home Equity Line of Credit (the line of credit). You should See also Selected Index Rates for ARMs over an 11-year read it carefully and retain it for your records. Period (www.federalreserve.gov/pubs/arms/arms_english. Availability of Terms: All of the terms described below are htm) for examples of common indexes that have changed subject to change. in the past. If these terms change (other than changes due to Interest rate: The percentage rate used to determine the 8 9 changes in the value of the index, as described below), and After the draw period ends, you will no longer be able you decide, as a result, not to enter into an agreement with to obtain credit advances and must repay the outstanding us, you are entitled to a refund of any fees you paid to us or balance (the “repayment period”). The length of the anyone else in connection with your application. repayment period will depend on the outstanding balance at the end of the draw period but will not be more than 20 Security Interest: We will take a mortgage on your years. During the repayment period, payments will be due home. You could lose your home if you do not meet the monthly and will equal 1/240th (0.417%) of the outstanding obligations in your agreement with us. balance on your line of credit at the end of the draw period, Possible Actions: We can (1) terminate your line of credit, or $25, whichever is greater, plus in either case finance require you to pay us the entire outstanding balance in one charges that accrued on the outstanding balance, plus any payment, and charge you certain fees; (2) refuse to make fees or charges due and any amounts past due. additional extensions of credit; or (3) reduce your credit Minimum Payment Example: If you made only the limit if: minimum monthly payments and took no other credit • You engage in fraud or material misrepresentation in advances, it would take 30 years to pay off a Loan Advance of connection with the line of credit. $10,000 at an Annual Percentage Rate of 3.75%. During that period, you would make 120monthly payments of $31.25 • You do not meet the repayment terms. followed by 240 monthly payments varying between $72.92 • Your action or inaction adversely affects the collateral and $41.80 or our rights in the collateral. Fees and Charges: To open and maintain a line of credit, We can refuse to make additional extensions of credit or you must pay the following fees to us: reduce your credit limit if: For All Lines: • The value of the dwelling securing the line of credit declines significantly below its appraised value for • Annual Fee: $75.00 purposes of the line of credit. • Service Fees: There are service charges equal to those • We reasonably believe you will not be able to meet charges being imposed by Lender for regular type the repayment requirements due to a material change checking accounts, such as “return items”. Ask us for our in your financial circumstances. current rate structure for such charges. • You are in of a material obligation in the Fees to Third Parties*, if applicable: agreement. • Convenient CloseSM (optional): $225 • Government action prevents us from imposing the • Title Insurance: $100 to $3,000 annual percentage rate provided for or impairs our security interest such that the value of the interest is • New York Mortgage : For lines greater than $750,000 less than 120 percent of the credit line. up to $2,000,000 fees may apply that generally range between $10,766 and $56,000. • A regulatory agency has notified us that continued advances would constitute an unsafe and unsound • Appraisal Fees: For lines greater than $750,000 appraisal practice. fees ranging between $490 - $1,000 may apply. • The maximum annual percentage rate is reached. • If you wish your attorney to conduct the closing, you may do so provided you agree to pay the attorney’s fee. The initial agreement permits us to make certain changes to the terms of the agreement at specified times or upon the NOTE: Amount of fees* you may pay are contingent upon occurrence of specified events. line amount, State and County where property is located and type of property. Minimum Payment Requirements: You can obtain advances of credit for 10 years (the “draw period”). The *If you ask, we will give you an itemization of these fees. draw period will begin on the fourth business day after Prepayment Fee: If you close your line of credit within you enter into the line of credit. During the draw period, two (2) years after the date on the Note, you must pay a payments will be due monthly. Your minimum monthly prepayment fee of $500. In addition, if this Note is secured payments will be equal to the finance charges that accrued by property located in the State of New York, you must also on the outstanding balance during the preceding month pay People’s United Bank back the mortgage tax paid by plus any fees or charges due and any amounts past due. People’s United at the time of origination of the Note. After During the draw period, the minimum payment will not two years there is no prepayment fee. reduce the principal that is outstanding on your line of Minimum Draw Requirements: The minimum credit credit. advance you can receive is $500. 10 11 Tax Deductibility: You should consult a tax advisor repayment period. regarding the deductibility of interest and charges for the Historical Example: The following table shows how line of credit. the annual percentage rate and the minimum monthly Variable Rate Information: The line of credit has a payments for a single Loan Advance of $10,000 on a line variable-rate feature, and the annual percentage rate of credit of less than $50,000 would have changed based (corresponding to the periodic rate) and the minimum on changes in the index over the past 15 years. The index monthly payment can change as a result. values are from the first week in March of each year. The annual percentage rate includes only interest and no While only one payment amount per year is shown, other costs. payments would have varied during each year. The annual percentage rate is based on the value The table assumes that no additional credit advances of an index. The index is the highest United States prime were taken, that only the minimum payments were made rate published in the Eastern Edition of The Wall Street each month, and that the rate remained constant during Journal on the last business day before the start of a each year. It does not necessarily indicate how the index or billing cycle. To determine the annual percentage rate your payments will change in the future. that will apply to your line of credit, we add or subtract a Annual Minimum margin to the value of the index. Your margin will depend Index Margin* Percentage Monthly on the amount of your line of credit and certain other Year (%) (%) Rate (%) Payment circumstances. Draw Period: Ask us for the current index value, margin, and annual 2007 8.25 1.24 9.49 79.08 percentage rate. After you open a line of credit, rate 2008 6.00 1.24 7.24 60.33 information will be provided on periodic statements that 2009 3.25 1.24 4.49 37.42 we send you. 2010 3.25 1.24 4.49 37.42 Rate Changes: The annual percentage rate can change 2011 3.25 1.24 4.49 37.42 each month. The maximum Annual Percentage Rate that 2012 3.25 1.24 4.49 37.42 can apply is 18%. Except for this 18% cap, there is no limit 2013 3.25 1.24 4.49 37.42 on the amount by which the rate can change during any 2014 3.25 1.24 4.49 37.42 one-year period. Rate information will be provided with 2015 3.25 1.24 4.49 37.42 each periodic statement that we send you. 2016 3.50 1.24 4.74 39.50 Auto Deduct Rate: You will receive the margin stated Repayment Period: in your Home Equity Line of Credit Note, Agreement and 2017 3.75 1.24 4.99 83.25 Disclosure Statement so long as you continue to make 2018 4.50 1.25 5.75 87.19 your payment using auto deduct from a People’s United 2019 5.50 0.00 5.50 82.92 checking account throughout the term of your home equity 2020 4.75 0.00 4.75 75.31 line of credit. If you do not satisfy this condition, your 2021 3.25 0.50 3.75 66.67 margin will increase by ¼ of 1% (0.25%). This will mean that your interest rate and Annual Percentage Rate will increase * This is a margin we have used recently. by ¼ of 1% (0.25%). Maximum Rate and Payment Examples: The maximum SECTION III: NOTICE TO MORTGAGE LOAN APPLICANT Annual Percentage Rate that can be reached during the People’s United /Line life of the plan will be 18%. If you had an outstanding Appraisal: In considering your application, People’s United balance of $10,000 during the draw period and if the may order an appraisal to determine the property’s value maximum Annual Percentage Rate of 18% were in effect, and may charge you for this appraisal. We will promptly give the minimum monthly payment at the maximum Annual you a copy of any appraisal, even if your loan does not close. Percentage Rate would be $150. This annual percentage You can pay for an additional appraisal for your own use at rate could be reached on the first day of the first complete your own cost. Do not rely on the appraisal report for any billing cycle. purpose whatsoever. It is prepared for our internal purposes If you had an outstanding balance of $10,000 at the only; it is not intended for purposes other than contributing beginning of the repayment period, and if the maximum to our decision on whether to make a loan to you. ANNUAL PERCENTAGE RATE of 18% were in effect, the Right to Attorney Representation minimum monthly payment at the maximum Annual (for located in Connecticut only) Percentage Rate would be $191.67. This annual percentage 1. You may have legal that differ from those of rate could be reached during the first month of the 12 13 People’s United. RIGHT TO COLLECT YOUR MORTGAGE LOAN PAYMENTS MAY BE TRANSFERRED. 2. People’s United may not require you to be represented by its attorney. You are applying for a mortgage loan covered by the Real 3. You may waive the right to be represented by an attorney. Estate Settlement Procedures Act (RESPA) (12 U.S.C. §2601 4. You may direct any complaints concerning violations of et seq.) RESPA gives you certain rights under Federal law. the matters set forth in this notice to: This statement describes whether the servicing for this loan Connecticut Banking Department may be transferred to a different loan servicer. “Servicing” 260 Constitution Plaza refers to collecting your principal, interest, and Hartford, CT 06103 payments, if any, as well as sending monthly or annual Right to Attorney Representation statements, tracking account balances, and handling other (for properties located in New York only) aspects of your loan. You will be given advance notice 1. You may have legal interests that differ from those of before a transfer occurs. People’s United. Check the appropriate box under “Servicing Transfer 2. The attorney for People’s United will not represent you Information.” and will not be your attorney or give you legal advice. SERVICING TRANSFER INFORMATION 3. You have the right to be represented by an attorney of your own choosing.  We may assign, sell, or transfer the servicing of your 4. You may waive the right to be represented by an attorney. loan while the loan is outstanding. 5. You may direct any complaints concerning violations of  We do not service mortgage loans of the type for which the matters set forth in this notice to: you applied. We intend to assign, sell, or transfer the New York Department of Financial Services servicing of your mortgage loan before the first One State Street payment is due. New York, NY 10004-1511  The loan for which you have applied will be serviced at Right to Attorney Representation ✔ this and we do not intend to sell, (for properties located in New Jersey only) transfer, or assign the servicing of the loan. The interests of the Borrower and Lender are or may be different and may conflict. The Lender’s Attorney represents SECTION VI: SELECTLOCK® OPTION only the Lender and not the Borrower and the Borrower is The SelectLock Loan option describes how you may be therefore advised to employ an attorney of the Borrower’s able to repay all or a portion of the balance owed on a choice licensed to practice law in the state of New Jersey to Home Equity Credit Line at a fixed interest rate instead of a represent the interests of the Borrower. variable rate of interest. This fixed rate repayment option is You may direct any complaints concerning violations of referred to as the SelectLock Loan. the matters set forth in this notice to: New Jersey Department of Banking and Insurance SelectLock Loan Option: During the Draw Period, you Division of Banking will have the option of converting some or all of the then P.O. Box 040 outstanding unpaid principal balance due on the Home Trenton, New Jersey 08625 Equity Credit Line to a fixed interest rate under certain conditions. The term of your SelectLock Loan may not SECTION IV: CUSTOMER IDENTIFICATION NOTICE exceed the term of your Home Equity Line of Credit. You To help the government fight the funding of terrorism may only ask to convert outstanding unpaid principal and money laundering activities, Federal law requires that is subject to a variable rate of interest at the time of all financial institutions to obtain, verify, and record your request. You may ask for a fixed rate repayment term information that identifies each person who opens an ranging from 60 to 240 months (repayment terms are account. subject to change without notice). The minimum SelectLock What this means for you: When you open an account, Loan balance you may convert to a fixed interest rate is we will ask for your name, address, date of birth, and other $10,000. You may not exercise a SelectLock Loan option if, information that will allow us to identify you. We may when you request the SelectLock Loan option or at the time also ask to see your driver’s license or other identifying you would exercise the SelectLock Loan option, we may documents. take any action described in the Possible Actions Section of this booklet. You may not exercise the SelectLock Loan SECTION V: TRANSFER OF SERVICING NOTICE option after the draw period has ended. If we agree to allow MORTGAGE SERVICING DISCLOSURE STATEMENT you to exercise a SelectLock Loan option, you will enter NOTICE TO FIRST MORTGAGE LOAN APPLICANTS: THE 14 15 into a written agreement outlining the specific terms of the SelectLock Loan (including the principal amount subject to the fixed interest rate, the dollar amount and number of required monthly payments, and the fixed-interest rate). Each SelectLock Loan is considered a sub-account with a separate payment and term of repayment and remains in effect until paid in full. The SelectLock Loan is not an additional extension of credit. SelectLock Loan Fee and Other Requirements: We will charge you a $50 fee whenever you exercise a SelectLock Loan option. You may not have more than three (3) outstanding SelectLock Loan balances at any one time. As you repay each SelectLock Loan balance, your available credit limit will be replenished in like amounts subject to your general availability to obtain advances under the terms of your Account Agreement.

SelectLock Loan Interest Rate: Your ANNUAL PERCENTAGE RATE (APR) may increase if you exercise the option to convert to a fixed rate and payment. The ANNUAL PERCENTAGE RATE (APR) for each SelectLock Loan is fixed and are typically higher than variable rates on the HELOC account for the principal amount and term you request (or for substantially similar principal amount and term), assuming no points or origination fees are paid. We may make lower SelectLock Loan interest rate options available from time to time. Please ask us for fixed interest rates and terms currently offered. If the SelectLock Loan fixed annual interest rate would be more than the ANNUAL PERCENTAGE RATE cap (18.0%), we may, at our option, either allow you to exercise the SelectLock Loan option in which case the fixed annual interest rate would be 18.0%, or alternatively, we may choose to not allow you to exercise the SelectLock Loan option. After you exercise a SelectLock Loan option, the principal balance converted to a fixed interest rate will not be subject to the variable rate feature. Minimum Monthly Payment: The minimum monthly payment required to be made in connection with the SelectLock Loan will be an amount that would allow you to repay the converted principal balance at the fixed interest rate that applies to the SelectLock Loan during the scheduled repayment term in substantially equal payment amounts over the term of the SelectLock Loan. Your total required payment each billing period would equal the minimum monthly payment for balances that are subject to the variable ANNUAL PERCENTAGE RATE plus the minimum monthly payment required to be made in connection with any SelectLock Loan option(s) you exercise.

©2021 People’s United Bank, N.A. | Member FDIC L0014 06/2021 00

Page 1 of 3 Rev. 11/2020 What Does People’s United Bank, N.A. FACTS Do With Your Personal Information?

Financial companies choose how they share your personal information. Federal law gives consumers Why? the right to limit some but not all sharing. Federal law also requires us to tell you how we collect, share, and protect your personal information. Please read this notice carefully to understand what we do. The types of personal information we collect and share depend on the product or service you have have with us. This information can include: What? • Social security number and income • Account number and assets • Credit history and investment experience All financial companies need to share customers’ personal information to run their everyday business. In the section below, we list the reasons financial companies can share their customers‘ How? personal information; the reasons People’s United Bank, N.A. chooses to share; and whether you can limit this sharing.

Does People’s Can you limit Reasons we can share your personal information United Bank share? this sharing?

For our everyday business purposes: Such as to process your transactions, maintain your account(s), respond to court orders and legal Yes No investigations, or report to credit bureaus. For our marketing purposes: Yes No Yes No Information about Yes No your transactions and experiences Information about Yes Yes your creditworthiness Yes Yes Yes Yes

• Call 1-877-894-0300 or To Limit • Mail the form below. Our If you are a new customer, we can begin sharing your information within 30 days from the date Sharing we provided or sent this notice. When you are no longer our customer, we continue to share your information as described in this notice. Questions? • Call 1-877-772-7254

L0017 11/2020 Page 1 of 3 00 Page 2 of 3 If you have a joint account, Mark any/all you want to limit: your choice(s) will apply to Do not share information about my creditworthiness with your affiliates for everyone on your account their everyday business purposes, and do not allow your affiliates to use my unless you mark below. personal information to market to me. Apply my choices only Do not share my personal information with non-affiliates to market their to me products and services to me.

Name Mail To: Address People’s United Bank, N.A. P.O. Box 804 City, State, Zip Brattleboro, VT 05302-0804 Account #

Who We Are Who is providing People’s United Bank, National Association; People’s Securities, Inc., a this notice? registered broker dealer; People’s United Advisors, Inc., a registered investment advisor.

What We Do How does People’s United To protect your personal information from unauthorized access and use, we use Bank protect my personal security measures that comply with federal law. These measures include computer information? safeguards and secured files and buildings. How does People’s United We collect your personal information, for example, when you: Bank collect my personal • Open an account or give us your income information information? • Apply for a loan or seek advice about your investments • Apply for insurance We also collect your personal information from others, such as credit bureaus, affiliates, or other companies. Why can’t I limit all sharing? Federal law gives you the right to limit only

creditworthiness

State laws and individual companies may give you additional rights to limit sharing. See below for more of your individual rights under state law. What happens when I limit Your choices will apply to everyone on your account – unless you tell us otherwise. sharing for an account I hold jointly with someone else?

L0017 11/2020 Page 2 of 3 00 Page 3 of 3

Companies related by common ownership or control. They can be financial and non-financial companies.

United Bank’s name, financial companies such as investment companies mortgage banking companies, securities broker-dealers, and insurance agents. Companies not related by common ownership or control. They can be financial and non-financial companies. • Non-affiliates we share with can include companies that provide services necessary to effect, administer, or enforce a transaction that you request or authorize; credit bureaus; law enforcement officers and government agencies and courts; and marketing firms. Joint marketing A formal agreement between non-affiliated financial companies thar together market financial products or services to you. • Our joint marketing partners include credit card companies.

Other Important Information

Vermont Residents: We will not disclose information about your creditworthiness to our affiliates and will not disclose your personal information, financial information, credit report, or health information to nonaffiliated third parties to market to you, other than as permitted by Vermont law, unless you authorize us to make those disclosures. For joint marketing, we will only disclose your name, contact information and information about your transactions. You are not required to return the opt-out form for these elections to apply. You may change your options by contacting us at the telephone number or address on the front page of this form.

California Residents: We will not share information we collect about you with nonaffiliated third parties, except as permitted by California law, such as to process your transactions, to maintain your account, or to offer products jointly marketed with other financial companies.

Nevada Residents: The following notice is required to be made under Nevada law to NV customers. At any time, you may request to be placed on our internal “Do Not Call” list by calling People’s United Bank at 1-800-294-2273. For more information about the Nevada “do not call” notice requirement, you may also contact the Bureau of , Office of the Nevada Attorney General, 555 E. Washington Ave., Suite 3900, Las Vegas, NV 89101; phone: 1-702-486-3132 or email [email protected].

L0017 11/2020 Page 3 of 3 00 Your home loan toolkit A step-by-step guide

Consumer Financial Protection Bureau Page 1

How can this toolkit help you? Buying a home is exciting and, let’s face it, complicated. This booklet is a toolkit that can help you make better choices along your path to owning a home.

After you finish this toolkit: § You’ll know the most important steps you need to take to get the best mortgage for your situation Section 1: Page 3

§ You’ll better understand your closing costs and what it takes to buy a home Section 2: Page 16

§ You’ll see a few ways to be a successful homeowner Section 3: Page 24

How to use the toolkit:

The location symbol orients you to where you are in the home buying process.

 The pencil tells you it is time to get out your pencil or pen to circle, check, or fill in numbers.

 The magnifying glass highlights tips to help you research further to find important information.

 The speech bubble shows you conversation starters for talking to others and gathering more facts.

About the CFPB

The Consumer Financial Protection Bureau is a federal agency that helps consumer finance markets work by making rules more effective, by consistently and fairly enforcing those rules, and by empowering consumers to take more control over their economic lives.

Have a question about a common consumer financial product or problem? You can find answers by visitingconsumerfinance.gov/askcfpb . Have an issue with a mortgage, , or other financial product or service? You can submit a complaint to the CFPB. We’ll forward your complaint to the company and work to get you a response. Turn to the back cover for details on how to submit a complaint or call us at (855) 411-2372.

1 Page 2

This booklet was created to comply with federal law pursuant to 12 U.S.C. 2604, 12 CFR 1024.6, and 12 CFR 1026.19(g).

2 YOUR HOME LOAN TOOLKIT Page 3

Choosing the best mortgage for you

You’re starting to look for a mortgage or IN THIS SECTION want to confirm you made a good decision. 1. Define what affordable means to you To make the most of your mortgage, you need to 2. Understand your credit decide what works for you and then shop around to find it. In this section, you’ll find eight steps to get 3. Pick the mortgage type that works for you the job done right. 4. Choose the right down payment for you Define what affordable means to you 1. 5. Understand the trade- Only you can decide how much you are comfortable paying off between points and for your housing each month. In most cases, your lender can interest rate consider only if you are able to repay your mortgage, not whether 6. Shop with several lenders you will be comfortable repaying your loan. Based on your whole 7. Choose your mortgage financial picture, think about whether you want to take on the mortgage payment plus the other costs of homeownership such 8. Avoid pitfalls and handle as appliances, repairs, and maintenance. problems

THE TALK Ask your spouse, a loved one, or friend about what affordable means to you:

“What’s more important—a bigger home with a larger mortgage or more financial flexibility?”

“How much do we want to budget for all the monthly housing costs, including repairs, furniture, and new appliances?”

“What will a mortgage payment mean for other financial goals?”

SECTION 1: CHOOSING THE BEST MORTGAGE FOR YOU 3 Page 4

KNOW YOUR NUMBERS Calculate the home payment you can take on by filling in the worksheets below: Think about what an affordable home loan looks like for you. These worksheets can help. First, estimate your total monthly home payment. Second, look at the percentage of your income that will go toward your monthly home payment. Third, look at how much money you will have available to spend on the rest of your monthly expenses.

Step 1. Estimate your total monthly home payment by adding up the items below Your total monthly home payment is more than just your mortgage. There are more expenses that go along with owning your home. Start with estimates and adjust as you go. EMPTY CELL MONTHLY ESTIMATE

Principal and interest (P&I) Your principal and interest payment depends on your home loan amount, the interest rate, and the number of years it takes to repay the loan. Principal is the amount you pay each month to reduce the loan $ balance. Interest is the amount you pay each month to borrow money. Many principal and interest calculators are available online.

Mortgage insurance is often required for loans with less than a 20% + $ down payment.

Property taxes The local assessor or auditor’s office can help you estimate property taxes for your area. If you know the yearly amount, divide by 12 and + $ write in the monthly amount.

Homeowner’s insurance You can call one or more insurance agents to get an estimate for + $ in your area. Ask if is required.

Homeowner’s association or fees, if they apply and other planned communities often require + $ homeowner’s association (HOA) fees.

My estimated total monthly home payment = $

4 YOUR HOME LOAN TOOLKIT Page 5

Step 2. Estimate the percentage of your income spent on your monthly home payment Calculate the percentage of your total monthly income that goes toward your total monthly home payment each month. A mortgage lending rule of thumb is that your total monthly home payment should be at or below 28% of your total monthly income before taxes. Lenders may approve you for more or for less depending on your overall financial picture.

  100  My estimated total monthly My total monthly income Percentage of my income home payment (from step 1) before taxes going toward my monthly home payment

Step 3. Estimate what is left after subtracting your monthly debts To determine whether you are comfortable with your total monthly home payment, figure out how much of your income is left after you pay for your housing plus your other monthly debts.

Total monthly income after taxes $

My estimated total monthly home payment (from step 1) — $

Monthly car payment(s) — $

Monthly student loan payment(s) — $

Monthly credit card payment(s) — $

Other monthly payments, such as child support or alimony — $

Total monthly income minus all payments This money must cover your utilities, groceries, child care, health $ insurance, repairs, and everything else. If this isn’t enough, consider = options such as buying a less expensive home or paying down debts.

Step 4. Your choice I am comfortable with a total monthly home payment of: $

SECTION 1: CHOOSING THE BEST MORTGAGE FOR YOU 5 Page 6

2. Understand your credit TIP Be careful Your credit, your credit scores, and how wisely you shop for a loan that best fits making any your needs have a significant impact on your mortgage interest rate and the fees big purchases on credit you pay. To improve your credit and your chances of getting a better mortgage, before you get current on your payments and stay current. About 35% of your credit scores close on your are based on whether or not you pay your bills on time. About 30% of your credit home. Even financing a new scores are based on how much debt you owe. That's why you may want to consider refrigerator paying down some of your debts. could make it harder for you to get a RESEARCH STARTER mortgage. Check out interest rates and make sure you’re getting the credit you’ve earned.

¨¨ Get your credit report at annualcreditreport.com and check it for errors. TIP If you find mistakes, submit a request to each of the credit bureaus asking them Correcting to fix the mistake. For more information about correcting errors on your credit errors on your report, visit consumerfinance.gov/askcfpb. credit report may raise your ¨¨ For more on home loans and credit, visit consumerfinance.gov/owning-a-home. score in 30 days or less. It’s a good idea to correct errors before NOW IN THE FUTURE you apply for a mortgage. §§ If your credit score is below 700, you will §§ If you work on improving your credit likely pay more for your mortgage. and wait to buy a home, you will likely save money. Some people who improve § § Most credit scoring models are built their credit save $50 or $100 on a typical so you can shop for a mortgage within monthly mortgage payment. a certain period—generally between 14 days and 45 days—with little or §§ An average consumer who adopts no impact on your score. If you shop healthy credit habits, such as paying outside of this period, any change bills on time and paying down credit triggered by shopping should be cards, could see a credit score minor—a small price to pay for saving improvement in three months or more. money on a mortgage loan.

YOUR CHOICE Check one:

¨ I will go with the credit I have. OR ¨ I will wait a few months or more and work to improve my credit.

6 YOUR HOME LOAN TOOLKIT Page 7

3. Pick the mortgage type—fixed or adjustable—that works for you

With a fixed-rate mortgage, your principal and interest payment stays the same for as long as you have your loan.

§§ Consider a fixed-rate mortgage if you want a predictable payment.

§§ You may be able to refinance later if interest rates fall or your credit or financial situation improves.

With an adjustable-rate mortgage (ARM), your payment often starts out lower TIP than with a fixed-rate loan, but your rate and payment could increase quickly. It is Many important to understand the trade-offs if you decide on an ARM. borrowers with ARMs §§ Your payment could increase a lot, often by hundreds of dollars a month. underestimate how much § § Make sure you are confident you know what your maximum payment could be their interest and that you can afford it. rates can rise. Planning to sell your home within a short period of time? That’s one reason some people consider an ARM. But, you probably shouldn’t count on being able to sell or refinance. Your financial situation could change. Home values may go down or interest rates may go up.

You can learn more about ARMs in the Consumer Handbook on Adjustable Rate Mortgages (files.consumerfinance.gov/f/201401_cfpb_booklet_charm.pdf) or by visiting consumerfinance.gov/owning-a-home.

YOUR CHOICE Check one: ¨ I prefer a fixed-rate mortgage. OR ¨ I prefer an adjustable-rate mortgage.

Check for risky loan features Some loans are safer and more predictable than others. It is a good idea to make sure you are comfortable with the risks you are taking on when you buy your home. You can find out if you have certain types of risky loan features from the Loan Terms section on the first page of your Loan Estimate.

A balloon payment is a large payment you must make, usually at the end of your loan repayment period. Depending on the terms of your loan, the balloon payment could be as large as the entire balance on your mortgage.

A prepayment penalty is an amount you have to pay if you refinance or pay off your loan early. A prepayment penalty may apply even if you sell your home.

SECTION 1: CHOOSING THE BEST MORTGAGE FOR YOU 7 Page 8

4. Choose the right down payment for you A down payment is the amount you pay toward the home yourself. You put a percentage of the home’s value down and borrow the rest through your mortgage loan.

YOUR CHOICE Check one:

YOUR DOWN PAYMENT WHAT THAT MEANS FOR YOU

¨¨ I will put down 20% A 20% or higher down payment likely provides the best rates and most or more. options. However, think twice if the down payment drains all your savings.

¨¨ I will put down You probably have to pay higher interest rates or fees. Lenders most between 5% likely require private mortgage insurance (PMI). PMI is an insurance and 19%. policy that lets you make a lower down payment by insuring the lender against loss if you fail to pay your mortgage.

Keep in mind when you hear about “no PMI” offers that doesn’t mean zero cost. No PMI offers often have higher interest rates and may also require you to take out a second mortgage. Be sure you understand the details.

¨¨ I will make no down Low down payment programs are typically more expensive because payment or a small they may require mortgage insurance or a higher interest rate. Look one of less than 5%. closely at your total fees, interest rate, and monthly payment when comparing options.

Ask about loan programs such as:

§§ Conventional loans that may offer low down payment options. §§ FHA, which offers a 3.5% down payment program. §§ VA, which offers a zero down payment option for qualifying veterans. §§ USDA, which offers a similar zero down payment program for eligible borrowers in rural areas.

The advantages of prepayment TIP Prepayment is when you make additional mortgage payments so you pay down Prepayment your mortgage early. This reduces your overall cost of borrowing, and you may is your choice. You don’t have be able to cancel your private mortgage insurance early and stop paying the to sign up for a premium. Especially if your down payment is less than 20%, it may make sense to program or pay make additional payments to pay down your loan earlier. a fee to set it up.

8 YOUR HOME LOAN TOOLKIT Page 9

5. Understand the trade-off between points and interest rate

Points are a percentage of a loan amount. For example, when a loan officer talks about one point on a $100,000 loan, the loan officer is talking about one percent of the loan, which equals $1,000. Lenders offer different interest rates on loans with different points. There are three main choices you can make about points. You can decide you don’t want to pay or receive points at all. This is called a zero point loan. You can pay points at closing to receive a lower interest rate. Or you can choose to have points paid to you (also called lender ) and use them to cover some of your closing costs.

The example below shows the trade-off between points as part of your closing costs and interest rates. In the example, you borrow $180,000 and qualify for a 30-year fixed-rate loan at an interest rate of 5.0% with zero points. Rates currently available may be different than what is shown in this example.

COMPARE THREE SCENARIOS OF HOW POINTS AFFECT INTEREST RATE

RATE 4.875% 5.0% 5.125%

POINTS +0.375 0 -0.375

YOUR You plan to keep your You are satisfied You don’t want to pay a SITUATION mortgage for a long time. with the market rate lot of cash upfront and You can afford to pay without points in you can afford a larger more cash at closing. either direction. mortgage payment.

YOU MAY Pay points now and get Zero points. Pay a higher interest rate CHOOSE a lower interest rate. This and get a lender credit will save you money over toward some or all of your the long run. closing costs.

WHAT You might agree to pay With no You might agree to a THAT $675 more in closing adjustments in higher rate of 5.125%, in MEANS costs, in exchange for a either direction, exchange for $675 toward lower rate of 4.875%. it is easier to your closing costs. understand what Now: You pay $675 you’re paying and Now: You get $675 Over the life of the loan: to compare prices. Over the life of the loan: Pay $14 less each month Pay $14 more each month

SECTION 1: CHOOSING THE BEST MORTGAGE FOR YOU 9 Page 10

6. Shop with several lenders You’ve figured out what affordable means for you. You’ve reviewed your credit TIP and the kind of mortgage and down payment that best fits your situation. Now is A loan officer is the time to start shopping seriously for a loan. The work you do here could save not necessarily you thousands of dollars over the life of your mortgage. shopping on your behalf or providing you GATHER FACTS AND COMPARE COSTS with the best fit or lowest cost ¨¨ Make a list of several lenders you will start with loan. Mortgages are typically offered by community , credit unions, mortgage brokers, online lenders, and large banks. These lenders have loan officers you TIP can talk to about your situation. It is illegal ¨¨ Get the facts from the lenders on your list for a lender  to pay a loan Find out from the lenders what loan options they recommend for you, and the officer more to costs and benefits for each. For example, you might find a discount is offered steer you into for borrowers who have completed a home buyer education program. a higher cost loan. ¨¨ Get at least three offers—in writing—so that you can compare them Review the decisions you made on pages 4 to 8 to determine the loan type, down payment, total monthly home payment and other features to shop for. Now ask at least three different lenders to give you a Loan Estimate, which is a standard form showing important facts about the loan. It should be sent to you within three days, and it shouldn’t be expensive. Lenders can charge you only a small fee for getting your credit report—and some lenders provide the Loan Estimate without that fee.

¨¨ Compare Total Loan Costs Review your Loan Estimates and compare Total Loan Costs, which you can see under Section D at the bottom left of the second page of the Loan Estimate. Total Loan Costs include what your lender charges to make the loan, as well as costs for services such as appraisal and title. The third page of the Loan Estimate shows the Annual Percentage Rate (APR), which is a measure of your costs over the loan term expressed as a rate. Also shown on the third page is the Total Interest Percentage (TIP), which is the total amount of interest that you pay over the loan term as a percentage of your loan amount. You can use APR and TIP to compare loan offers.

RESEARCH STARTER Loan costs can vary widely from lender to lender, so this is one place where a little research may help you save a lot of money. Here’s how: ¨¨ Ask and title professionals about average costs in your area. ¨¨ Learn more about loan costs, and get help comparing options, at consumerfinance.gov/owning-a-home.

10 YOUR HOME LOAN TOOLKIT Page 11

THE TALK Talking to different lenders helps you to know what options are available and to feel more in control. Here is one way to start the conversation:

“This mortgage is a big decision and I want to get it right. Another lender is offering me a different loan that may cost less. Let’s talk about what the differences are and whether you may be able to offer me the best deal.”

TRACK YOUR LOAN OFFERS Fill in the blanks for these important factors:

LOAN OFFER 1 LOAN OFFER 2 LOAN OFFER 3

Lender name

Loan amount $ $ $

Interest rate % % %

o Fixed o Fixed o Fixed o Adjustable o Adjustable o Adjustable

Monthly principal and interest $ $ $

Monthly mortgage insurance $ $ $

Total Loan Costs (See section D on the second $ $ $ page of your Loan Estimate.)

My best loan offer is:

SECTION 1: CHOOSING THE BEST MORTGAGE FOR YOU 11 Page 12

7. Choose your mortgage You’ve done a lot of hard work to get this far! Now it is time to make your call.

CONFIRM YOUR DECISION Check the box if you agree with the statement: ¨¨ I can repay this loan.

¨¨ I am comfortable with my monthly payment.

¨¨ I shopped enough to know this is a good deal for me.

¨¨ There are no risky features such as a balloon payment or prepayment penalty I can’t handle down the road.

¨¨ I know whether my principal and interest payment will increase in the future.

Still need advice? The U.S. Department of Housing and Urban Development (HUD) sponsors housing counseling agencies throughout the country to provide free or low-cost advice. To find a HUD-approved housing counselor visit consumerfinance.gov/find-a-housing-counselor or call HUD’s interactive voice system at (800) 569-4287.

Intent to proceed When you receive a Loan Estimate, the lender has not yet approved or denied your loan. Up to this point, they are showing you what they expect to offer if you decide to move forward with your application. You have not committed to this lender. In fact, you are not committed to any lender before you have signed final closing documents.

Once you have found your best mortgage, the next step is to tell the loan officer you want to proceed with that mortgage application. This is called expressing your intent to proceed. Lenders have to wait until you express your intent to proceed before they require you to pay an application fee, appraisal fee, or most other fees.

Rate lock Your Loan Estimate may show a rate that has been “locked” or a rate that is “floating,” which means it can go up or down. Mortgage interest rates change daily, sometimes hourly. A rate lock sets your interest rate for a period of time. Rate locks are typically available for 30, 45, or 60 days, and sometimes longer.

12 YOUR HOME LOAN TOOLKIT Page 13

The interest rate on your Loan Estimate is not a . If your rate is floating and it is later locked, your interest rate will be set at that later time. Also, if there are changes in your application—including your loan amount, credit score, or verified income—your rate and terms will probably change too. In those situations, the lender gives you a revised Loan Estimate.

There can be a downside to a rate lock. It may be expensive to extend if your transaction needs more time. And, a rate lock may lock you out of better market pricing if rates fall.

THE TALK Rate lock policies vary by lender. Choosing to lock or float your rate can make an important difference in your monthly payment. To avoid surprises, ask:

“What does it mean if I lock my rate today?”

“What rate lock time frame does this Loan Estimate provide?”

“Is a shorter or longer rate lock available, and at what cost?”

“What if my closing is delayed and the rate lock expires?”

“ If I lock my rate, are there any conditions under which my rate could still change?”

SECTION 1: CHOOSING THE BEST MORTGAGE FOR YOU 13 Page 14

8. Avoid pitfalls

WHAT NOT TO DO WHY?

Don’t sign documents where You are agreeing to repay a substantial amount of money over important details are left an extended period of time. Make sure you know what you are blank or documents you getting into and protect yourself from fraud. don’t understand.

Don’t assume you are on HUD-approved housing counselors can help you navigate your own. the process and find programs available to help first-time homebuyers.

You can find a HUD-approved housing counselor in your area at consumerfinance.gov/find-a-housing-counselor or call HUD’s interactive voice system at (800) 569-4287.

Don’t take on more Make certain that you want the loan that you are requesting and mortgage than you want that you are in a position to live up to your end of the bargain. or can afford.

Don’t count on refinancing, If you are not comfortable with the loan offered to you, ask and don’t take out a loan if your lender if there is another option that works for you. Keep you already know you will looking until you find the right loan for your situation. have to change it later.

Don’t fudge numbers You are responsible for an accurate and truthful application. Be or documents. upfront about your situation. is a serious offense.

Don’t hide important Hiding negative information may delay or derail your financial information. loan application.

14 YOUR HOME LOAN TOOLKIT Page 15

Handle problems

WHAT HAPPENED WHAT TO DO ABOUT IT

I have experienced a problem Ask to talk to a supervisor. It may be a good idea to talk to with my loan application or the loan officer first, and if you are not satisfied, ask to speak how my loan officer is with a supervisor. treating me.

I think I was unlawfully The Fair Housing Act and Equal Credit Opportunity Act prohibit discriminated against when housing and credit discrimination. If you think you have been I applied for a loan or when discriminated against during any part of the mortgage process, I tried to buy a home. you can submit a complaint and describe what happened. To do so, you can call the Consumer Financial Protection Bureau at (855) 411-2372 or visit consumerfinance.gov/complaint. Submit a complaint to the U.S. Department of Housing and Urban Development (HUD) by calling (800) 669-9777, TTY (800) 927- 9275. Or, file a complaint online atHUD.gov .

You can find more information about your rights and how to submit a complaint with the CFPB at consumerfinance.gov/fair-lending.

I have a complaint. Submit a complaint to the Consumer Financial Protection Bureau if you have problems at any stage of the mortgage application or closing process, or later if you have problems making payments or become unable to pay. You can call (855) 411-2372 or visit consumerfinance.gov/complaint.

I think I may have been the Don’t believe anyone who tells you they are your “only chance victim of a predatory lender to get a loan,” or that you must “act fast.” Learn the warning or a loan fraud. signs of and protect yourself. Find more information at portal.hud.gov/hudportal/HUD?src=/program_ offices/housing/sfh/hcc/OHC_PREDLEND/OHC_LOANFRAUD.

You could learn more about your loan officer at nmlsconsumeraccess.org.

SECTION 1: CHOOSING THE BEST MORTGAGE FOR YOU 15 Page 16

Your closing

You’ve chosen a mortgage. Now it’s time to IN THIS SECTION select and work with your closing agent. 1. Shop for mortgage closing services

Once you’ve applied for a mortgage, you may 2. Review your revised Loan feel like you’re done. But mortgages are Estimate

complicated and you still have choices to make. 3. Understand and use your Closing Disclosure 1. Shop for mortgage closing services

Once you’ve decided to move forward with a lender based on the Loan Estimate, TIP you are ready to shop for the who gathers all the legal documents, closing agent Settlement closes the loan, and handles the money involved in your purchase. After you services may apply for a loan, your lender gives you a list of companies that provide closing feel like a drop in the bucket services. You may want to use one of the companies on the list. Or, you may be compared to able to choose companies that are not on the list if your lender agrees to work with the cost of the your choice. The seller cannot require you to buy a title insurance policy from a home. But in some states particular title company. borrowers who shop around may save Closing agent hundreds of In most of the country, a settlement agent does your closing. In other states, dollars. particularly several states in the West, the person is known as an escrow agent. And in some states, particularly in the Northeast and South, an attorney may be required.

RESEARCH STARTER When you compare closing agents, look at both cost and customer service.

¨¨ Ask your real estate professional and your friends. These people may know companies they would recommend. Be sure to ask how that company handled problems and if they have a good reputation.

16 YOUR HOME LOAN TOOLKIT Page 17

¨¨ Review the list of companies your lender gave you. Select a few companies on the list and ask for references from people who recently bought a home. Ask those people how the company handled problems that came up during the transaction.

Title insurance When you purchase your home, you receive a document most often called a , which shows the seller transferred their legal ownership, or “title,” to the home to you. Title insurance can provide protection if someone later sues and says they have a claim against the home. Common claims come from a previous owner’s failure to pay taxes or from contractors who say they were not paid for work done on the home before you purchased it.

Most lenders require a Lender’s Title Insurance policy, which protects the amount they lent. You may want to buy an Owner’s Title Insurance policy, which protects your financial investment in the home. The Loan Estimate you receive lists the Owner’s Title Insurance policy as optional if your lender does not require the policy as a condition of the loan.

Depending on the state where you are buying your home, your title insurance company may give you an itemized list of fees at closing. This itemized list may be required under state law and may be different from what you see on your Loan Estimate or Closing Disclosure. That does not mean you are being charged more. If you add up all the title-related costs your title insurance company gives you, it should match the totals of all the title-related costs you see on your Loan Estimate or Closing Disclosure. When comparing costs for title insurance, make sure to compare the bottom line total.

Home inspector and home appraiser When you are considering buying a home, it is smart to check it out carefully to see if it is in good condition. The person who does this for you is called a home inspector. The inspector works for you and should tell you whether the home you want to buy is in good condition and whether you are buying a “money pit” of expensive repairs. Get your inspection before you are finally committed to buy the home.

A home inspector is different from a home appraiser. The appraiser is an independent professional whose job is to give the lender an estimate of the home’s market value. You are entitled to a copy of the appraisal prior to your closing. This allows you to see how the price you agreed to pay compares to similar and recent property sales in your area.

SECTION 2: YOUR CLOSING 17 Page 18

2. Review your revised Loan Estimate When important information changes, your lender is required to give you a new Loan Estimate that shows your new loan offer.

It is illegal for a lender to quote you low fees and costs for its services on your Loan Estimate and then surprise you with much higher costs in a revised Loan Estimate or Closing Disclosure. However, a lender may change the fees it quotes you for its services if the facts on your application were wrong or changed, you asked for a change, your lender found you did not qualify for the original loan offer, or your Loan Estimate expired.

Here are common reasons why your Loan Estimate might change:

§§ You decided to change loan programs or the amount of your down payment.

§§ The appraisal on the home you want to buy came in higher or lower than expected.

§§ You took out a new loan or missed a payment and that has changed your credit.

§§ Your lender could not document your overtime, bonus, or other income.

THE TALK If your Loan Estimate is revised you should look it over to see what changed. Ask your lender:

“ Can you explain why I received a new Loan Estimate?”

“ How is my loan transaction different from what I was originally expecting?”

“ How does this change my loan amount, interest rate, monthly payment, cash to close, and other loan features?”

18 YOUR HOME LOAN TOOLKIT Page 19

3. Understand and use your Closing Disclosure You’ve chosen a home you want to buy and your offer has been accepted. You’ve also applied for and been approved for a mortgage. Now you are ready to take legal possession of the home and promise to repay your loan.

At least three days before your closing, you should get your officialClosing Disclosure, which is a five-page document that gives you more details about your loan, its key terms, and how much you are paying in fees and other costs to get your mortgage and buy your home.

Many of the costs you pay at closing are set by the decisions you made when you were shopping for a mortgage. Charges shown under “services you can shop for” may increase at closing, but generally by no more than 10% of the costs listed on your final Loan Estimate.

The Closing Disclosure breaks down your closing costs into two big categories:

YOUR LOAN COSTS OTHER COSTS §§ The lender’s Origination Costs to make or §§ Property taxes. “originate” the loan, along with application § fees and fees to underwrite your loan. § Homeowner’s insurance premiums. You can Underwriting is the lender’s term for making shop around for homeowner’s insurance sure your credit and financial information from your current insurance company, or is accurate and you meet the lender’s many others, until you find the combination requirements for a loan. of premium, coverage, and customer service that fits your situation. Your lender will ask §§ Discount points—that is, additional money you for proof you have an insurance policy on you pay up front to reduce your interest rate. your new home.

§§ Services you shopped for, such as your §§ Any portion of your total mortgage payment closing or settlement agent and related you must make before your first full payment title costs. is due.

§§ Services your lender requires for your loan. §§ Flood insurance, if required. These include appraisals and credit reports.

RESEARCH STARTER

Get tips, a step-by-step checklist, and help with the rest of the documents you’ll see at closing at consumerfinance.gov/owning-a-home.

SECTION 2: YOUR CLOSING 19 Page 20

This form is a statement of final loan terms and closing costs. Compare this Closing Disclosure document with your Loan Estimate. What is your Closing Closing Information Transaction Information Loan Information Disclosure? Date Issued 4/15/2013 Borrower Michael Jones and Mary Stone Loan Term 30 years Closing Date 4/15/2013 123 Anywhere Street Purpose Purchase Disbursement Date 4/15/2013 Anytown, ST 12345 Product Fixed Rate The five-page Closing Settlement Agent Epsilon Title Co. Seller Steve Cole and Amy Doe File # 12-3456 321 Somewhere Drive Loan Type x Conventional FHA Property 456 Somewhere Ave Anytown, ST 12345 VA ______Disclosure sums up the terms Anytown, ST 12345 Lender Ficus Bank Loan ID # 123456789 Sale Price $180,000 MIC # 000654321 of your loan and what you pay at closing. You can easily Loan Terms Can this amount increase after closing? Loan Amount $162,000 NO compare the numbers to the Interest Rate 3.875% NO Loan Estimate you received Monthly Principal & Interest $761.78 NO See Projected Payments below for your earlier. There should not be Estimated Total Monthly Payment any significant changes other Does the loan have these features? Prepayment Penalty YES • As high as $3,240 if you pay off the loan during the than those you have already first 2 years agreed to. Balloon Payment NO

Projected Payments Take out your own Closing Payment Calculation Years 1-7 Years 8-30

Disclosure, or review the Principal & Interest $761.78 $761.78 example here. Double-check Mortgage Insurance + 82.35 + — Estimated Escrow + 206.13 + 206.13 that you clearly understand Amount can increase over time

Estimated Total what you’ll be expected to Monthly Payment $1,050.26 $967.91 pay—over the life of your loan This estimate includes In escrow? Estimated Taxes, Insurance x Property Taxes YES and at closing. & Assessments $356.13 x Homeowner’s Insurance YES Amount can increase over time a month x Other: Homeowner’s Association Dues NO See page 4 for details See Escrow Account on page 4 for details. You must pay for other property costs separately. ON PAGE 1 OF 5 Costs at Closing

Loan terms Closing Costs $9,712.10 Includes $4,694.05 in Loan Costs + $5,018.05 in Other Costs – $0 Review your monthly payment. in Lender Credits. See page 2 for details. Cash to Close $14,147.26 Includes Closing Costs. See Calculating Cash to Close on page 3 for details. Part of it goes to repay what you borrowed (and may build equity CLOSING DISCLOSURE PAGE 1 OF 5 • LOAN ID # 123456789 in your new home), and part of Closing Disclosure, page 1. The most important facts about your loan are on the first page. it goes to pay interest (which doesn’t build equity). Equity is the current market value of your ON PAGE 2 OF 5 home minus the amount you still owe on your mortgage. Total Loan Costs Prepaids Origination charges are fees Homeowner’s insurance is Costs at Closing your lender charges to make often paid in advance for the Be prepared to bring the your loan. Some closing costs first full year. Also, some taxes full “Cash to Close” amount are fees paid to the providers and other fees need to be paid with you to your closing. This selected by your lender. Some in advance. amount includes your down are fees you pay to providers payment and closing costs. you chose on your own. The closing costs are itemized on the following pages.

20 YOUR HOME LOAN TOOLKIT Page 21

Closing Cost Details Borrower-Paid Seller-Paid Paid by Others Loan Costs At Closing Before Closing At Closing Before Closing A. Origination Charges $1,802.00 Escrow 01 0.25 % of Loan Amount (Points) $405.00 02 Application Fee $300.00 An escrow or impound 03 Underwriting Fee $1,097.00 04 05 account is a special account 06 07 08 where monthly insurance and B. Services Borrower Did Not Shop For $236.55 01 Appraisal Fee to John Smith Appraisers Inc. $405.00 02 Credit Report Fee to Information Inc. $29.80 tax payments are held until 03 Flood Determination Fee to Info Co. $20.00 04 Flood Monitoring Fee to Info Co. $31.75 they are paid out each year. 05 Tax Monitoring Fee to Info Co. $75.00 06 Tax Status Research Fee to Info Co. $80.00 07 You get a statement showing 08 09 10 how much money your lender C. Services Borrower Did Shop For $2,655.50 01 Pest Inspection Fee to Pests Co. $120.50 02 Survey Fee to Surveys Co. $85.00 or plans 03 Title – Insurance Binder to Epsilon Title Co. $650.00 04 Title – Lender’s Title Insurance to Epsilon Title Co. $500.00 to require for your escrow or 05 Title – Settlement Agent Fee to Epsilon Title Co. $500.00 06 Title – Title Search to Epsilon Title Co. $800.00 07 impound account. 08 D. TOTAL LOAN COSTS (Borrower-Paid) $4,694.05 Loan Costs Subtotals (A + B + C) $4,664.25 $29.80

Other Costs E. Taxes and Other Government Fees $85.00 You also get an annual analysis 01 Recording Fees Deed: $40.00 Mortgage: $45.00 $85.00 02 Transfer Tax to Any State $950.00 showing what happened to the F. Prepaids $2,120.80 01 Homeowner’s Insurance Premium ( 12 mo.) to Insurance Co. $1,209.96 02 Mortgage Insurance Premium ( mo.) money in your account. Your 03 Prepaid Interest ( $17.44 per day from 4/15/13 to 5/1/13 ) $279.04 04 Property Taxes ( 6 mo.) to Any County USA $631.80 05 lender must follow federal G. Initial Escrow Payment at Closing $412.25 01 Homeowner’s Insurance $100.83 per month for 2 mo. $201.66 02 Mortgage Insurance per month for mo. rules to make sure they do not 03 Property Taxes $105.30 per month for 2 mo. $210.60 04 end up with a large surplus 05 06 07 or shortage in your escrow or 08 Aggregate Adjustment – 0.01 H. Other $2,400.00 01 HOA Capital Contribution to HOA Acre Inc. $500.00 impound account. 02 HOA Processing Fee to HOA Acre Inc. $150.00 03 Home Inspection Fee to Engineers Inc. $750.00 $750.00 04 Fee to XYZ Warranty Inc. $450.00 05 Real Estate Commission to Alpha Real Estate Broker $5,700.00 06 Real Estate Commission to Omega Real Estate Broker $5,700.00 07 Title – Owner’s Title Insurance (optional) to Epsilon Title Co. $1,000.00 08 I. TOTAL OTHER COSTS (Borrower-Paid) $5,018.05 Other Costs Subtotals (E + F + G + H) $5,018.05

J. TOTAL CLOSING COSTS (Borrower-Paid) $9,712.10 Closing Costs Subtotals (D + I) $9,682.30 $29.80 $12,800.00 $750.00 $405.00 Lender Credits

CLOSING DISCLOSURE PAGE 2 OF 5 • LOAN ID # 123456789

Details of your closing costs appear on page 2 of the Closing Disclosure.

USE YOUR CLOSING DISCLOSURE TO CONFIRM THE DETAILS OF YOUR LOAN Circle one. If you answer no, turn to the page indicated for more information:

The interest rate is what I was expecting based on my Loan Estimate. YES / NO (see page 10)

I know whether I have a prepayment penalty or balloon payment. YES / NO (see page 7)

I know whether or not my payment changes in future years. YES / NO (see page 7)

I see whether I am paying points or receiving points at closing. YES / NO (see page 9)

I know whether I have an escrow account. YES / NO (see above)

SECTION 2: YOUR CLOSING 21 Page 22

Calculating Cash to Close Use this table to see what has changed from your Loan Estimate. ON PAGE 3 OF 5 Loan Estimate Final Did this change? Total Closing Costs (J) $8,054.00 $9,712.10 YES • See Total Loan Costs (D) and Total Other Costs (I) Calculating Cash to Close Closing Costs Paid Before Closing $0 – $29.80 YES • You paid these Closing Costs before closing Closing Costs Financed (Paid from your Loan Amount) $0 $0 NO Closing costs are only a part Down Payment/Funds from Borrower $18,000.00 $18,000.00 NO Deposit – $10,000.00 – $10,000.00 NO of the total cash you need to Funds for Borrower $0 $0 NO Seller Credits $0 – $2,500.00 YES • See Seller Credits in Section L bring to closing. Adjustments and Other Credits $0 – $1,035.04 YES • See details in Sections K and L Cash to Close $16,054.00 $14,147.26 Summaries of Transactions Summaries of Transactions Use this table to see a summary of your transaction. The section at the bottom of BORROWER’S TRANSACTION SELLER’S TRANSACTION K. Due from Borrower at Closing $189,762.30 M. Due to Seller at Closing $180,080.00 01 Sale Price of Property $180,000.00 01 Sale Price of Property $180,000.00 the page sums up how the 02 Sale Price of Any Personal Property Included in Sale 02 Sale Price of Any Personal Property Included in Sale 03 Closing Costs Paid at Closing (J) $9,682.30 03 money flows among you, the 04 04 Adjustments 05 05 06 lender, and the seller. 06 07 07 08 Adjustments for Items Paid by Seller in Advance Adjustments for Items Paid by Seller in Advance 08 City/Town Taxes to 09 City/Town Taxes to 09 County Taxes to 10 County Taxes to 10 Assessments to 11 Assessments to 11 HOA Dues 4/15/13 to 4/30/13 $80.00 12 HOA Dues 4/15/13 to 4/30/13 $80.00 12 13 13 14 14 15 15 16 L. Paid Already by or on Behalf of Borrower at Closing $175,615.04 N. Due from Seller at Closing $115,665.04 01 Deposit $10,000.00 01 Excess Deposit 02 Loan Amount $162,000.00 02 Closing Costs Paid at Closing (J) $12,800.00 03 Existing Loan(s) Assumed or Taken Subject to 03 Existing Loan(s) Assumed or Taken Subject to 04 04 Payoff of First Mortgage Loan $100,000.00 05 Seller Credit $2,500.00 05 Payoff of Second Mortgage Loan Other Credits 06 06 Rebate from Epsilon Title Co. $750.00 07 ON PAGE 4 OF 5 07 08 Seller Credit $2,500.00 Adjustments 09 08 Additional Information About This Loan10 Loan Disclosures 09 11 10 12 11 Loan Disclosures 13 Adjustments for Items Unpaid by Seller Adjustments for Items Unpaid by Seller Page 4 breaks down what is and Assumption Escrow Account 12 City/TownIf you Taxes sell 1/1/13 or transfer to 4/14/13 this property to another person,$365.04 your lender14 City/TownFor Taxesnow, 1/1/13your loan to 4/14/13 $365.04 13 County Taxes to 15 County Taxes to will allow, under certain conditions, this person to assume this x will have an escrow account (also called an “impound” or “trust” is not included in your escrow 14 Assessments to 16 Assessments to loan on the original terms. account) to pay the property costs listed below. Without an escrow 15 17 x will not allow assumption of this loan on the original terms. account, you would pay them directly, possibly in one or two large or impound account. Make sure 16 18 payments a year. Your lender may be liable for penalties and interest 17 19 Demand Feature for failing to make a payment. CALCULATION CALCULATION you understand what is paid Your loan Total Due from Borrower has a demand at Closing feature, (K) which permits your$189,762.30 lender to require Totalearly Due to SellerEscrow at Closing (M) $180,080.00 Total Paid Alreadyrepayment by or on Behalf of the of Borrower loan. You at shouldClosing (L)review – $175,615.04 your note for details.Total Due fromEscrowed Seller at Closing (N) $2,473.56 Estimated –total $115,665.04 amount over year 1 for from your escrow account and Cash to Closex doesx From not have To a Borrower demand feature. $14,147.26 Cash FromProperty x To Costs Seller your escrowed$64,414.96 property costs: over Year 1 Homeowner’s Insurance Property Taxes CLOSING DISCLOSURELate Payment PAGE 3 OF 5 • LOAN ID # 123456789 what you are responsible for If your payment is more than 15 days late, your lender will charge a late fee of 5% of the monthly principal and interest payment. Non-Escrowed $1,800.00 Estimated total amount over year 1 for Property Costs your non-escrowed property costs: over Year 1 Homeowner’s Association Dues paying yourself. (Increase in Loan Amount) Under your loan terms, you You may have other property costs. are scheduled to make monthly payments that do not pay all of Initial Escrow $412.25 A cushion for the escrow account you the interest due that month. As a result, your loan amount will Payment pay at closing. See Section G on page 2. increase (negatively amortize), and your loan amount will likely become larger than your original loan amount. Increases in your loan amount lower the equity you have in this property. Monthly Escrow $206.13 The amount included in your total Payment monthly payment. may have monthly payments that do not pay all of the interest due that month. If you do, your loan amount will increase (negatively amortize), and, as a result, your loan amount may will not have an escrow account because you declined it your become larger than your original loan amount. Increases in your lender does not offer one. You must directly pay your property loan amount lower the equity you have in this property. costs, such as taxes and homeowner’s insurance. Contact your x do not have a negative amortization feature. lender to ask if your loan can have an escrow account.

Partial Payments No Escrow Your lender Estimated Estimated total amount over year 1. You x may accept payments that are less than the full amount due Property Costs must pay these costs directly, possibly (partial payments) and apply them to your loan. over Year 1 in one or two large payments a year. may hold them in a separate account until you pay the rest of the Escrow Waiver Fee payment, and then apply the full payment to your loan. does not accept any partial payments. In the future, Your property costs may change and, as a result, your escrow pay- If this loan is sold, your new lender may have a different policy. ment may change. You may be able to cancel your escrow account, but if you do, you must pay your property costs directly. If you fail Security Interest to pay your property taxes, your state or local government may (1) You are granting a security interest in impose fines and penalties or (2) place a tax lien on this property. If 456 Somewhere Ave., Anytown, ST 12345 you fail to pay any of your property costs, your lender may (1) add the amounts to your loan balance, (2) add an escrow account to your loan, or (3) require you to pay for that the lender Top image: A summary You may lose this property if you do not make your payments or buys on your behalf, which likely would cost more and provide fewer of important financial satisfy other obligations for this loan. benefits than what you could buy on your own. information appears on page 3 of the Closing Disclosure.

Bottom image: More details of your loan appear on page 4 of your Closing Disclosure.

22 YOUR HOME LOAN TOOLKIT CLOSING DISCLOSURE PAGE 4 OF 5 • LOAN ID # 1234567890 Page 23

ON PAGE 5 OF 5 Loan Calculations Other Disclosures Finance Charge Total of Payments. Total you will have paid after Appraisal you make all payments of principal, interest, If the property was appraised for your loan, your lender is required to mortgage insurance, and loan costs, as scheduled. $285,803.36 give you a copy at no additional cost at least 3 days before closing. In addition to paying back the If you have not yet received it, please contact your lender at the Finance Charge. The dollar amount the loan will information listed below. cost you. $118,830.27 amount you are borrowing, you Contract Details See your note and security instrument for information about Amount Financed. The loan amount available after • what happens if you fail to make your payments, pay a lot of interest over the paying your upfront finance charge. $162,000.00 • what is a default on the loan, • situations in which your lender can require early repayment of the Annual Percentage Rate (APR). Your costs over loan, and life of the loan. This is why it is the loan term expressed as a rate. This is not your • the rules for making payments before they are due. interest rate. 4.174% worthwhile to shop carefully for Liability after Total Interest Percentage (TIP). The total amount If your lender forecloses on this property and the foreclosure does not of interest that you will pay over the loan term as a cover the amount of unpaid balance on this loan, the best loan for your situation. percentage of your loan amount. 69.46% x state law may protect you from liability for the unpaid balance. If you refinance or take on any additional debt on this property, you may lose this protection and have to pay any debt remaining even after foreclosure. You may want to consult a lawyer for more information. Annual Percentage Rate (APR) state law does not protect you from liability for the unpaid balance.

Questions? If you have questions about the Refinance Your APR is your total cost of loan terms or costs on this form, use the contact Refinancing this loan will depend on your future financial situation, information below. To get more information the property value, and market conditions. You may not be able to or make a complaint, contact the Consumer refinance this loan. credit stated as a rate. Your Financial Protection Bureau at www.consumerfinance.gov/mortgage-closing Tax Deductions APR is generally higher than ? If you borrow more than this property is worth, the interest on the loan amount above this property’s fair market value is not deductible from your federal income taxes. You should consult a tax advisor for your interest rate, because the more information. Contact Information APR takes into consideration Lender Mortgage Broker Real Estate Broker Real Estate Broker Settlement Agent (B) (S) all the costs of your loan, over Name Ficus Bank FRIENDLY MORTGAGE Omega Real Estate Alpha Real Estate Epsilon Title Co. BROKER INC. Broker Inc. Broker Co. Address 4321 Random Blvd. 1234 Terrapin Dr. 789 Local Lane 987 Suburb Ct. 123 Commerce Pl. the full term of the loan. Somecity, ST 12340 Somecity, MD 54321 Sometown, ST 12345 Someplace, ST 12340 Somecity, ST 12344 45 NMLS ID 222222 If anything on the Closing ST License ID Z765416 Z61456 Z61616 Contact Joe Smith JIM TAYLOR Samuel Green Joseph Cain Sarah Arnold Disclosure is not clear to you, Contact NMLS ID 12345 394784 Contact P16415 P51461 PT1234 ST License ID ask your lender or settlement Email joesmith@ JTAYLOR@ [email protected] [email protected] sarah@ ficusbank.com FRNDLYMTGBRKR.CM epsilontitle.com agent, “What does this mean?” Phone 123-456-7890 333-444-5555 123-555-1717 321-555-7171 987-555-4321

Confirm Receipt By signing, you are only confirming that you have received this form. You do not have to accept this loan because you have signed or received this form.

Applicant Signature Date Co-Applicant Signature Date

CLOSING DISCLOSURE PAGE 5 OF 5 • LOAN ID # 123456789

Loan calculations, disclosures, and contact information for your files are on page 5 of the Closing Disclosure.

NOW IN THE FUTURE §§ Now you’ve spent time understanding §§ If you are not comfortable with your what you need to do and what you need mortgage and your responsibility to to pay, as a new homeowner. make payments, you might not be able to keep your home. §§ Now is the time to step back and feel sure you want to proceed with the loan. §§ If you’ve made a careful decision about what you can afford and the mortgage you wanted, you will be able to balance owning your home and meeting your other financial goals.

SECTION 2: YOUR CLOSING 23 Page 24

Owning your home

Now you’ve closed on your mortgage IN THIS SECTION and the home is yours. 1. Act fast if you get behind on your payments

Owning a home is exciting. And your home is 2. Keep up with ongoing costs also a large investment. Here’s how to protect 3. Determine if you need that investment. flood insurance

4. Understand Home Equity 1. Act fast if you get behind on your Lines of Credit (HELOCs) payments and refinancing

If you fall behind on your mortgage, the company that accepts payments on your mortgage contacts you. This company is your mortgage servicer. Your servicer is required to let you know what options are available to avoid foreclosure. Talk to your mortgage servicer if you get into trouble, and call a housing counselor (see page 12 for contact information). HUD-approved counselors are professionals who can help you, often at little or no charge to you.

Homeowners struggling to pay a mortgage should beware of scammers promising to lower mortgage payments. Only your mortgage servicer can evaluate you for a loan modification. If you suspect a scam you can call (855) 411-2372 or visit consumerfinance.gov/complaint.

2. Keep up with ongoing costs Your mortgage payment is just one part of what it costs to live in your new home. Your escrow account holds your monthly taxes and homeowner’s insurance payments—but if you have no escrow account, you need to keep up with these on your own. Your home needs maintenance and repairs, so budget and save for these too.

24 YOUR HOME LOAN TOOLKIT Page 25

3. Determine if you need flood insurance Flooding causes more than $8 billion in damages in the United States in an average year. You can protect your home and its contents from flood damage. Depending on your property location, your home is considered either at high-risk or at moderate-to-low risk for a flood. Your insurance premium varies accordingly. You can find out more about flood insurance atFloodSmart.gov . Private flood insurance could also be available.

Although you may not be required to maintain flood insurance on all structures, you may still wish to do so, and your mortgage lender may still require you to do so to protect the collateral securing the mortgage. If you choose to not maintain flood insurance on a structure, and it floods, you are responsible for all flood losses relating to that structure.

4. Understand Home Equity Lines of Credit (HELOCs) and refinancing

Homeowners sometimes decide they want to borrow against the value of their home to help remodel or pay for other large expenses. One way to do this is with a Home Equity Line of Credit (HELOC). You can learn more about HELOCs at files.consumerfinance.gov/f/201401_cfpb_booklet_heloc.pdf.

Financial counselors caution homeowners against using a HELOC to wipe out . If you use a HELOC as a quick fix to a serious spending problem, you could end up back in debt and lose your home.

If you decide to take out a HELOC or refinance your mortgage, the Truth in Lending Act (TILA) gives you the right to rescind, meaning you can change your mind and cancel the loan. But you can only rescind a refinance or HELOC within three days of receiving a proper notice of the right to rescind from your lender. You cannot rescind if you are using your HELOC to buy a home.

In the case of a refinance, consider how long it will take for the monthly savings to pay for the cost of the refinance. Review the closing costs you paid for your original loan to purchase the home. Refinancing costs can be about the same amount. A common rule of thumb is to proceed only if the new interest rate saves you that amount over about two years (in other words, if you break even in about two years).

 Congratulations! You have accomplished a lot. It is not easy—you should feel proud of the work you’ve done.

SECTION 3: OWNING YOUR HOME 25  Online tools CFPB website consumerfinance.gov

Answers to common questions consumerfinance.gov/askcfpb

Tools and resources for home buyers consumerfinance.gov/owning-a-home

Talk to a housing counselor consumerfinance.gov/find-a-housing-counselor

 General inquiries Consumer Financial Protection Bureau 1700 G Street NW Washington DC 20552

 Submit a complaint Online consumerfinance.gov/complaint

By phone 855-411-CFPB (2372); TTY/TDD 855-729-CFPB (2372); 8 a.m. to 8 p.m. Eastern Time, Monday-Friday

By fax 855-237-2392

By mail Consumer Financial Protection Bureau P.O. Box 4503 Iowa City, Iowa 52244

 S hare your thoughts Facebook.com/cfpb Twitter.com/cfpb

Last updated August 2015