What is the Truth-In-Lending Disclosure?
Borrowers can expect to see a Truth-In-Lending Disclosure (or TIL) shortly after they apply for a mortgage. The TIL provides information about the loan and it is required by federal law. It provides information on the cost of your credit so that you may compare those costs with several different lenders.
Why is my Annual Percentage Rate (APR) different from the rate I'm locked at?
The annual percentage rate (APR) is the cost of the loan in percentage terms and includes private mortgage insurance, and prepaid finance charges (loan discount, origination fees, prepaid interest, and other credit costs). The APR is calculated by spreading these charges over the life of the loan, thus resulting in a higher rate that the interest rate shown on the 'Note'.
Other items you can expect to see on the TIL are:
- Finance charges
- Amount financed
- Total Payments
- Payment Schedule
- Prepayment penalties
- Assumption Opton, if allowed
Why is the Amount Financed less than my actual loan amount?
The amount financed is your loan amount minus any prepaid finance charges (closing costs, that include origination fees, discount points, mortgage insurance (MI), and interest).