What is the early truth in lending disclosure document and why is it important?


An Early Truth in Lending disclosure statement (or simply TIL) is probably the most important document for a home loan applicant. It is basically a document that fully lists all the costs that the loan applicant would have to bear in the event he/she accepts the agreement and it helps borrowers take into account all costs in their entirety.

Lenders are required by federal law to provide a Truth in Lending (TIL) document to all loan applicants within three business days of receiving an application. If you applied for a mortgage loan and received the TIL, here are some of the terms you must know in order to make a fully informed decision.

Annual Percentage Rate:

The APR is the cost of the money that you borrow form a lender. It includes not only the contractual interest rate, but also any other charges such as participation fee, origination fee, service charges, late fees, commitment or discount fees, buyer's points, finder's feels, etc. along with any private mortgage insurance (PMI). APR is always greater than the interest rate because it includes all the other costs along with the interest cost. APR is the effective or actual rate at which you borrow money from the lender

Finance Charge:

This is also the cost of credit with the difference being that the figure is expressed in dollars rather than a percentage. The finance charge includes the total amount of interest incurred over the loan's lifetime, plus any other charges.

Amount Financed:

This is the amount of your loan. If there are some prepaid payments that have to be made before the loan is delivered they are subtracted from the total loan.

Total of Payments:

This is the total amount you will pay over the time period of the loan. This is a sum of the principal and the interest payments.

Payment Schedule:

As the name implies it is the breakdown of monthly payments that would have to made, with their due dates. If you have an Adjustable Rate Mortgage, then the monthly payments would be subject to change.

Getting a mortgage for a home is a massive commitment. If you are unsure about anything in the TIL, don't hesitate to ask your loan officer.

Mortgage rates hit their lowest since 1955. Ask the home loan experts we recommend Quicken Loans how to take advantage of them.
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