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Mortgage Truth-in-Lending Statement Overview and Example

Mortgage Truth-in-Lending Statement Overview and Example

Harry Jensen, Trusted Mortgage Expert with 45+ Years of Experience
, Trusted Mortgage Expert with 45+ Years of Experience

    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.

  • FREEandCLEAR Mortgage Instructional Video

    Truth-in-Lending Statement Overview Video

  • 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
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  • Sources

    Truth-in-Lending Statement: https://www.consumerfinance.gov/ask-cfpb/what-is-a-truth-in-lending-disclosure-en-180/

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. More about Harry

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