Question:

What is the Truth in Lending APR?

Answer:

Truth in Lending APR number is the Annual Percentage Rate (APR) of the loan. APR is the true cost of the loan on a yearly basis spread over the term of the loan and expressed in percentage. This APR number will usually be higher than the interest rate of the loan.

The APR is often used as a major loan shopping criterion for a mortgage. The higher the APR, the more expensive the loan is. However, the TILA statement often contains APR that is calculated differently among lenders. Therefore, it is unlikely that you will be aware of the exact items included in the APR calculation.

It is advisable that you request a detailed description of per item charge included in the APR. The following includes most common charges as seen by a major lender. However, those items may not be applicable to your TIL settlement and loan costs. It is, though, only an example of what kind of information you need to request from the lender about loan costs included in the APR.

Fees Commonly Included In the TIL for Calculating APR

Lender Origination Fee Loan Discount Fee Appraisal Fee (Debated) 
Credit Report Fee (May not be included)  Home Inspection Fee Broker's Origination Fee
Broker Loan Discount Fee Tax Service Fee Flood Determination Fee (Lender required)
Life Of Loan Coverage Flood Fee Table Funding Fee Lender Underwriting Fee
Broker Underwriting Fee Processing Fee Courier Fee
Lender Courier Fee 442 Recertification Fee (Lender required)  Mortgage Insurance Premium and Escrow Cushion
Administrative Fees Application Fee Commitment Fee
Escrow/Closing Agent/Closing Attorney Fee Title Binder Fee Document Preparation Fee By Escrow
Redraw Fee Notary Fee Lender's Attorney Fee
Title Policy Premium Fee Loan Tie-In Sub Escrow
Title Endorsement Fees Fax Fee By Title Company Courier Fee By Title Company
Recording Fees Wire Transfer Fee (regardless of who charges it) Signing Fee
Non-Closing Attorney Fee
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