Recently the Federal Trade Commission (FTC) researched the level of understanding that consumers had about mortgages. What it found out was that we all have problems understanding mortgages and that the current required disclosure documents are not helping that much. Certain issues, such as the escrow for real estate taxes and insurance, closing costs, prepayment penalties, or balloon payments, seem to stump the majority of people.
What is going to be done about this? Look for the Federal Reserve and the Department of Housing and Urban Development (HUD) to begin changes to how the basic information about a mortgage is provided to the consumer. This disclosure will probably be in major changes to the currently used forms.
For the home buyer, remember that mortgages are very complicated. No single book can provide the consumer with the huge variety of terms that can be included in a mortgage loan. It is up to the consumer to make sure that his or her loan officer answers all questions and explains the terms of the mortgage in a manner that is understandable. If your loan officer refuses to do that, find another lending institution.