The Senate’s new financial overhaul bill will drastically change mortgages
According to the New York Times, these changes, designed to protect consumers from costly practices from their lenders, will have a big effect on the way mortgages work. They will change not only the way financial institutions can charge fees, but also to the way in which the mortgages are set up in the first place, and how applicants are considered.
Lenders can no longer charge homeowners a penalty fee for paying off their loan prior to the term of the mortgage agreement. They also cannot allow borrowers to make payments so low that the cost of the mortgage would go up, and pre-payment fees are still allowed in the first three years of the mortgage.
The bill prevents banks from rewarding third parties, like mortgage brokers, from setting up mortgages with costly fees that would be harmful to the consumer. It also requires that lenders take into account things like an applicants’ income, credit history and assets so that it can judge what kind of loan works best for the consumer.
It has been a week of good news for consumers as mortgage rates were announced to have reached a recent low.
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