You've just listed a new home and you want buyer's to know how affordable the monthly payment will be. You pull out your handy dandy calculator and do an estimate of the monthly payment. You are excited to figure out that the monthly payment would be less than the average rent in your area. You quickly add a line to your advertising that says "Own this home for only $1500 per month."
Did you know you may have just violated the Truth and Lending Laws and Regulation Z? What seems like a very simple idea could land you in very hot water. Regulation Z in simple terms says if you use any "trigger" term such as an amount of a down payment, monthly payment, number of payments or an interest rate you now must disclose all of the following:
The amount of the down payment or percentage of down payment
Term of repayment
APR and if it will change during the term of the loan then you must include that information as well
Violation of the Truth in Lending laws aren't cheap. Besides requiring you to stop advertising a court could require:
Monetary fines of up to $5000
Criminal prosecution and up to 1 year of jail time
Civil penalities between $100 to $1000
What seemed like such a great idea to bring attention to the affordability of buying a new home suddenly has more significance than you thought. If you are considering advertising a monthly payment on your latest listing call your favorite lender and ask them to do a full rate sheet for you. I don't know about you but I don't think stripes are very flattering except on a zebra.