Truth In Lending Disclosure Statement

The Truth In Lending Act was promulgated by Congress to provide consumers with an easier method of comparing loans and strengthen the informed use of credit and to protect the consumer from inaccurate and unfair use of credit.  This disclosure statement is highlights the key information a consumer needs when comparing loans.  Lenders are required to provide a borrower with this information in a timely manner.  In turn, the lender must sign a copy  as evidence that they received it.

The annual percentage rate is the cost of your credit as a yearly rate.  Depending on rates and other fees, this APR is often higher than the interest rate on your loan.  For example, our interest rate on our loan is 5.00%, but our APR is 5.723%.

The finance charge is the total amount of interest you will pay for the term of the loan, including interest paid at closing, origination fee and other charges paid to the lender.  This is the total cost of acquiring the loan.

The amount financed is the amount of credit provided on your behalf.  This number is calculated by subtracting the prepaid finance charges (loan origination fees, points, adjusted interest and initial mortgage insurance premium) from the mortgage amount.

The total payments is the amount you would pay if you made the minimum payments for the entire term of the loan.

Next, the amount of money the lender will pay for each payment during the course of the loan is outlined.  If the monthly payments change during the course of the loan, this section tells you how many months you will be paying each amount.

Then there are a list of check the box type statements.  Including the amount you will pay for recording legal documents, whether or not you must pay a penalty if you pay off the loan early (none for us), and whether or not you may be entitled to a refund of part of the finance charge (we are not, but I have found no evidence that anyone ever is).  This simply means we are not entitled to get a refund on the portion of our payments that went towards interest, since a large chuck of the early payments is interest. Also, whether or not someone buying your property can assume your loan.  Because we are getting an FHA loan, a buyer can assume our loan, of course subject to certain restrictions.