I know many Mortgage Originators who are apprehensive at presenting the T.I.L. and with good cause. Putting a document in front of a borrower that shows they will pay over twice what they borrowed is disheartening to say the least. We as the mortgage professional have spent considerable time outlining the benefits of our proposed mortgage program and believe that what we have presented is the best option for the borrower. Then here's the T.I.L. with its huge numbers and an A.P.R. that is higher then the note rate we have already disclosed. So here is what I do and what I say:
The T.I.L. is the second form I have my borrowers sign, second only to the loan application it's self. I do this for a few reasons; first it gets the "sticker shock" out of they way. By showing your client the T.I.L. right out of the gate you are disclosing right from the beginning that borrowing money has costs and the T.I.L. is the disclosure that reflects the highest dollar amount of those costs. I also present it first because the borrower is still paying attention and as they will see another T.I.L. at closing, them having a strong recollection of it prevents issues at the closing table. Another reason I present it first is that once the larger numbers are seen by the borrower and they understand how the A.P.R. works it makes the transition to the G.F.E. smoother.
So here's what I say:
Mr. & Mrs. Homeowner, as I've said many times before, I do things very differently then most people in the mortgage business. I believe that my job is not only to help you obtain home financing but also to make sure you are fully informed about the loan you select as well. That means showing you the whole picture; the good, the bad and the ugly. Well this document is the ugly. Not only is the ugly, it is the ugliest as it is going to show you how much money you will repay over the life of this loan.
I then show them the amount they will repay including prepaids, which is the highest amount in dollars on any of the disclosures and then proceed to explain to them what prepaid finance charges are and how they affect A.P.R., this enables me to effectively transition to the G.F.E.
I have found that by doing this, the rest of the disclosure signing is much simpler and faster.
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