Your choise of lender and type will influences not only your senttlemen cost but also the mortgage cost of your mortgage loan. There are many types of lenders and types of loans you can choose. You may be familiar with
banks, savings associations, mortgage companies and credit unions, many of which provide home mortgage loans.
You may find a listing of some mortgage lenders in the yellow pages or a listing of rates in your local newspaper.

Mortgage Brokers. Some companies, known as "mortgage brokers" offer to find you a mortgage lender willing to
make you a loan. A mortgage broker may operate as an independent business and may not be operating as your
"agent" or representative. Your mortgage broker may be paid by the lender, you as the borrower, or both. You may
wish to ask about the fees that the mortgage broker will receive for its services.

Government Programs. You may be eligible for a loan insured through the Federal Housing Administration ("FHA")
or guaranteed by the Department of Veterans Affairs or similar programs operated by cities or states. These
programs usually require a smaller downpayment. Ask lenders about these programs. You can get more information
about these programs from the agencies that run them. (See Appendix to this Booklet.)

CLOs. Computer loan origination systems, or CLOs, are computer terminals sometimes available in real estate
offices or other locations to help you sort through the various types of loans offered by different lenders. The CLO
operator may charge a fee for the services the CLO offers. This fee may be paid by you or by the lender that you
select.

Types of Loans. Loans can have a fixed interest rate or a variable interest rate. Fixed rate loans have the same
principal and interest payments during the loan term. Variable rate loans can have any one of a number of "indexes"
and "margins" which determine how and when the rate and payment amount change. If you apply for a variable rate
loan, also known as an adjustable rate mortgage ("ARM"), a disclosure and booklet required by the Truth in Lending
Act will further describe the ARM. Most loans can be repaid over a term of 30 years or less. Most loans have equal
monthly payments. The amounts can change from time to time on an ARM depending on changes in the interest
rate. Some loans have short terms and a large final payment called a "balloon." You should shop for the type of
home mortgage loan terms that best suit your needs.

Interest Rate, "Points" & Other Fees. Often the price of a home mortgage loan is stated in terms of an interest rate,
points, and other fees. A "point" is a fee that equals 1 percent of the loan amount. Points are usually paid to the
lender, mortgage broker, or both, at the settlement or upon the completion of the escrow. Often, you can pay fewer
points in exchange for a higher interest rate or more points for a lower rate. Ask your lender or mortgage broker
about points and other fees.

A document called the Truth in Lending Disclosure Statement will show you the "Annual Percentage Rate" ("APR")
and other payment information for the loan you have applied for. The APR takes into account not only the interest
rate, but also the points, mortgage broker fees and certain other fees that you have to pay. Ask for the APR before
you apply to help you shop for the loan that is best for you. Also ask if your loan will have a charge or a fee for
paying all or part of the loan before payment is due ("prepayment penalty"). You may be able to negotiate the terms
of the prepayment penalty.

Lender-Required Settlement Costs. Your lender may require you to obtain certain settlement services, such as a
new survey, mortgage insurance or title insurance. It may also order and charge you for other settlement-related
services, such as the appraisal or credit report. A lender may also charge other fees, such as fees for loan
processing, document preparation, underwriting, flood certification or an application fee. You may wish to ask for an
estimate of fees and settlement costs before choosing a lender. Some lenders offer "no cost" or "no point" loans but
normally cover these fees or costs by charging a higher interest rate.

Comparing Loan Costs. Comparing APRs may be an effective way to shop for a loan. However, you must compare
similar loan products for the same loan amount. For example, compare two 30-year fixed rate loans for $100,000.
Loan A with an APR of 8.35% is less costly than Loan B with an APR of 8.65% over the loan term. However, before
you decide on a loan, you should consider the up-front cash you will be required to pay for each of the two loans as
well.

Another effective shopping technique is to compare identical loans with different up-front points and other fees. For
example, if you are offered two 30-year fixed rate loans for $100,000 and at 8%, the monthly payments are the
same, but the up-front costs are different:

Loan A - 2 points ($2,000) and lender required costs of $1800 = $3800 in costs.

Loan B - 2 1/4 points ($2250) and lender required costs of $1200 = $3450 in costs.

A comparison of the up-front costs shows Loan B requires $350 less in up-front cash than Loan A. However, your
individual situation (how long you plan to stay in your house) and your tax situation (points can usually be deducted
for the tax year that you purchase a house) may affect your choice of loans.

Lock-ins. "Locking in" your rate or points at the time of application or during the processing of your loan will keep the
rate and/or points from changing until settlement or closing of the escrow process. Ask your lender if there is a fee
to lock-in the rate and whether the fee reduces the amount you have to pay for points. Find out how long the lock-in
is good, what happens if it expires, and whether the lock-in fee is refundable if your application is rejected.

Tax and Insurance Payments. Your monthly mortgage payment will be used to repay the money you borrowed plus
interest. Part of your monthly payment may be deposited into an "escrow account" (also known as a "reserve" or
"impound" account) so your lender or servicer can pay your real estate taxes, property insurance, mortgage
insurance and/or flood insurance. Ask your lender or mortgage broker if you will be required to set up an escrow or
impound account for taxes and insurance payments.

Transfer of Your Loan. While you may start the loan process with a lender or mortgage broker, you could find that
after settlement another company may be collecting the payments on your loan. Collecting loan payments is often
known as "servicing" the loan. Your lender or broker will disclose whether it expects to service your loan or to
transfer the servicing to someone else.

Mortgage Insurance. Private mortgage insurance and government mortgage insurance protect the lender against
default and enable the lender to make a loan which the lender considers a higher risk. Lenders often require
mortgage insurance for loans where the downpayment is less than 20% of the sales price. You may be billed
monthly, annually, by an initial lump sum, or some combination of these practices for your mortgage insurance
premium. Ask your lender if mortgage insurance is required and how much it will cost. Mortgage insurance should
not be confused with mortgage life, credit life or disability insurance, which are designed to pay off a mortgage in the
event of the borrower's death or disability.

You may also be offered "lender paid" mortgage insurance ("LPMI"). Under LPMI plans, the lender purchases the
mortgage insurance and pays the premiums to the insurer. The lender will increase your interest rate to pay for the
premiums -- but LPMI may reduce your settlement costs. You cannot cancel LPMI or government mortgage
insurance during the life of your loan. However, it may be possible to cancel private mortgage insurance at some
point, such as when your loan balance is reduced to a certain amount. Before you commit to paying for mortgage
insurance, find out the specific requirements for cancellation.

Flood Hazard Areas. Most lenders will not lend you money to buy a home in a flood hazard area unless you pay for
flood insurance. Some government loan programs will not allow you to purchase a home that is located in a flood
hazard area. Your lender may charge you a fee to check for flood hazards. You should be notified if flood insurance
is required. If a change in flood insurance maps brings your home within a flood hazard area after your loan is made,
your lender or servicer may require you to buy flood insurance at that time.

Betty Garcia

786 229 3636