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Harry Jensen, Trusted Mortgage Expert with 45+ Years of Experience
Updated March 15, 2020
Please note that the Truth-in-Lending Statement was replaced by the Loan Estimate effective October 3rd, 2015 and is no longer used in the mortgage process. We provide the Truth-in-Lending Statement Key Features overview below for your reference but recommend that you review the Loan Estimate for more current information
The Truth-in-Lending Statement contains information about mortgage costs and features such as the Annual Percentage Rate (APR) and Finance Charge.
In addition to the APR and Finance Charge the other key item included in the Truth-in-Lending Statement is the Indication of Key Mortgage Features. The Indication of Key Mortgage Features addresses the mechanics of your mortgage such as potential balloon payments, possible changes in interest rate over the term of the mortgage (for Adjustable Rate and Interest Only Mortgages) and other possible costs such as prepayment penalties and late payment charges.
The table below outlines and describes the key mortgage features addressed in the Truth-In-Lending Statement.
Other TIL Statement Mortgage Features
Demand Feature
If your loan has a demand feature, which is more commonly referred to as a balloon payment, you are required to pay off the balance of your loan at the end of the term of the loan
A loan with a demand feature / balloon payment, typically involves the borrower paying off a significant amount at the end of the loan, as opposed to paying the loan off a little bit every month over the life of the loan
The TIL Statement lets the borrower know that he or she is on the hook for this payment
Variable Feature
If your loan has a variable feature, it means that your interest rate could change over the life of the loan
Adjustable Rate Mortgages (ARMs) and Interest Only Mortgages have variable features as the interest rate will very likely fluctuate over the course of the mortgage
If your loan has a variable feature, the lender is required to provide additional disclosure that estimates your projected monthly mortgage payment at potential future interest rates
Prepayment penalty
Some mortgages require the borrower to pay a penalty if you repay the loan in full prior to a specified term
You should avoid prepayment penalties
Late Charge Policy
Fee charged to the borrower if you do not make your monthly mortgage payment on time
You should avoid late charges
Homeowners Insurance Cost (also known as Hazard Insurance)
Estimated cost for the borrower to obtain homeowners insurance
Required by lender for you to obtain a mortgage
Mortgage Assumability
Indicates if you can transfer your mortgage to another party if someone buys your property
Loan terms assume conforming mortgage amount, 80% LTV ratio and minimum borrower credit score of 740. $150,000 minimum mortgage amount. Borrower is responsible for $995 lender fee. Loan terms are subject to change without notice.
Data provided by Informa Research Services. Payments do not include amounts for taxes and insurance premiums. Click for more information on rates and product details.
Review our Truth-in-Lending Statement video tutorial
“What is a Truth-in-Lending disclosure for a mortgage loan?” CFPB. Consumer Financial Protection Bureau, September 13 2017. Web.
About the author
Harry Jensen, Mortgage Expert
Harry is the co-founder of FREEandCLEAR. He is a mortgage expert with over 45 years of industry experience. Over his career, Harry has closed thousands of loans for satisfied borrowers and now offers his advice and insights on FREEandCLEAR. Harry is a licensed mortgage professional (NMLS #236752). More about Harry
