This document is used to help customers understand the federal disclosures that we are required to send to all of our borrowers. The Truth In Lending (TIL) disclosure is one of the most commonly misunderstood documents in the mortgage process. The TIL is designed to help borrowers understand that their borrowing cost consist of more than the simply the interest rate on the new mortgage. The TIL expresses the cost of the new loan in the form of an Annual Percentage Rate (APR) which essentially says, "If all your mortgage related closing costs were blended together with your interest rate over the first year, this new figure would reflect your true cost of the loan in the form of a higher percentage rate (APR)". Further, the APR is not the interest rate of the loan and does not the affect the payments of the loan, but is solely used as tool for borrowers to compare one lender's offer from another's.
The APR is not the same as your interest rate. Because the APR includes items in addition to interest, it is higher than the note rate. It is a combination of the amount of interest to be paid over the life of the loan, together with the prepaid finance charges computed as an annual rate.
Represents the total dollar amount you will have to pay over the life of the loan- i.e., the cost of the loan to you. It is a combination of the amount of interest paid over the life of the loan plus any/all mortgage insurance premiums, plus the prepaid finance charges.
The amount financed is different and will always be different from what you borrowed. The amount financed represents your new mortgage amount minus points and certain closing fees as shown in your Good Faith Estimate of Closing Costs.
This is the estimated dollar amount of your monthly payments.
If the first box is checked, your loan may have a prepayment penalty. This means that a fee may be charged to you if you pay off your loan before it is due. The second box indicates that if you pay the loan off early you will not receive a refund for interest that you paid in theprevious years. You will not owe any future interest, but will not be refunded any interest from previous mortgage payments already paid.
States that your loan may require certain types of property insurance. Hazard Insurance will be required on most, if not all properties, that have been financed. Mortgage Insurance will be required if the loan amount is greater than 80% of the value or purchase price of the property. Flood Insurance may be required if the property lies in a flood plain.
Your lender will determine if the loan is assumable (transferable with no change in rate or conditions) by a third party. Very few modern mortgages are assumable.