The "True Cost Calculator," Fannie Mae's much ballyhooed tool to help borrowers determine the actual cost of a particular mortgage and which product might be the best one for them, is up and running on the Internet.

The electronic estimator is part of the secondary mortgage market giant's newly redesigned consumer web site, www.homepath.com. The site is designed to help consumers locate a Fannie Mae mortgage product that fits their needs and a list of lenders who offer it.

But the company also is making the calculator available through lenders as a link from their own web sites. And several already have jumped at the opportunity.

One is Fleet Mortgage, which is in the process of building a hyperlink to the calculator. "We believe (it) will be a useful tool for our customers as they search for a mortgage," said Fleet Chairman A. William Schenck.

Most calculators available to consumers on the Internet are notoriously inaccurate. And even when they are correct, they do little more than allow would-be borrowers to determine their monthly cost for principal and interest based on the loan amount and mortgage rate.

The True Cost Calculator, on the other hand, allows borrowers to compare all of the costs of obtaining financing. Computations also will include points, mortgage insurance, appraisals, title insurance and miscellaneous settlement charges.

Furthermore, as perhaps an even more useful and realistic cost assessment tool, it will permit borrowers to compute the costs over the full term of the loan under consideration, or for the time they actually expect to hold the mortgage.

Consumer activist Stephan Brobeck, executive director of the Consumer Federation of America, applauded the new calculator. "No longer will consumers have to puzzle over the cost implications of rates versus points," he said.

The tool works incrementally, making basic assumptions at the start but becoming much more accurate as data fields are filled. "To get started, all you have to do is enter a mortgage amount and an interest rate," said David Voth, a Fannie Mae vice president said at the Mortgage Bankers Association's national secondary market conference in San Diego, where the calculator was unveiled..

It also contains what is described as "reasonable checks" to make sure that users don't insert misleading or inaccurate data. But company officials conceded that the old computer warning, garbage in, garbage out, still holds true.

Although the calculator is brand new, Fannie Mae is already thinking about future enhancements, including covering such "miscellaneous" ownership costs as hazard insurance and monthly property taxes.

In addition, future incarnations will allow borrowers to analyze various loans insured by the Federal Housing Administration. Only conventional products are included now.

Besides the calculator, consumers can use the revamped Homepath site to locate credit counselors in their areas, access information of Fannie Mae-owned properties, or look up unfamiliar terms in a comprehensive glossary.

Published: May 11, 2000

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When Lew Sichelman first started writing about housing in 1969, he was the youngest real estate writer in the country. Now, 37 years later, he's one of the oldest -- and most decorated. He has been rated the top housing columnist in the country by the National Association of Realtors as well as by his peers in the National Association of Real Estate Editors. Indeed, NAREE has recognized his work on numerous occasions. One year - due to his advancing age, he can't recall which one - he earned top honors in the annual NAREE Journalism Contest in three out of the four major writing categories. It was the first time one writer has won so many NAREE awards in a single year. Known for his ability to make even the most difficult topics understandable, Sichelman also has been honored by the National Association of Home Builders and the Mortgage Bankers Association. He began providing in-depth coverage of and consumer-oriented information about housing and housing finance at the Washington Daily News, where he was real estate editor. He held that same position for nine more years at the Washington Star, which purchased the News in 1972. The Star, a so-called "writer's newspaper" which also had the misfortune of being an evening paper, was put out of its misery in 1981, and Sichelman, who had begun self-syndicating his column in 1978, decided to become a full-time columnist. Today, his column, "The Housing Scene," is distributed by United Media to newspapers throughout the country. He also is on the staff of National Mortgage News, an independent newspaper which is considered the bible of the mortgage business. And he writes for numerous other publications, including MarketWatch.com, where he answers readers questions once a week, Sports Illustrated (don't ask), RealtyTimes.com, BigBuilder and others. Sichelman is married, the father of five and grandfather of eleven.