Question:

What is disclosed according to the federal Truth in Lending law?

Answer:

Federal Truth in Lending law is part of the Consumer Credit Protection Act. It seeks to endorse educated consumer credit use through disclosures about costs and terms of loans exceeding $25,000 or using real estate for collateral.

Truth in Lending Disclosures As Per Federal Law

The following items are of greatest importance to consumers:

Name and Address of Mortgage Company/Creditor
Annual Percentage Rate (APR) Yearly rate of your credit ______%
Finance Charge How much the credit will cost? $______
Amount Financed Loan amount $______
Total of Payments Loan amount + Interest cost $______
Total Sale Price Total cost of purchase on credit including down payment of $______ $______

Amount Financed Itemization

Optional

Payment Schedule

Number of payments, amount of payments, when payments are due

Demand Feature

Yes/No (Explained)

Variable Rate Statement

APR may increase, if ______

Interest rate may not increase over ______

If rate increases ______

Effect of interest rate increase ______

Insurance

Credit disability insurance and credit life insurance will/will not be purchased separately, or in combination

Security

The property used as collateral for the mortgage loan

Late charge

Late payment fee is $______

Prepayment

What happens if you pay off early

(Penalty charges and terms if you have them)

Mortgage Loan Assumption

Assumption on conventional loans is not allowed.

That is, no one purchasing your house is allowed to take on what is remaining of your mortgage

Required Deposit/Earnest Money

Deposit money is excluded from the APR

Additional Information

Nonpayment and default terms; prepayment penalties/refunds.

Bear in mind that the abovementioned items do not appear the same way on the TIL settlement statements as they vary among lenders. However, these are the most important items that have to be looked for and used for loan comparison shopping.

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