As per the Truth in Lending Act (TILA), a lender must offer a Truth-in-Lending Disclosure Statement within three days of application. This is just one of the documents that you receive from your mortgage lender after you complete the application. This statement reveals the total cost of your mortgage, offering a detailed overview of the amount being financed, the annual percentage rate (APR), the finance charge and the payment schedule.
How the Truth-in-Lending Disclosure Statement can help get an estimate of your mortgage loan cost?
Among the many characteristics of this document include a declaration on the annual percentage rate, which is slightly more than the interest rate that you see on the Good Faith Estimate, another document your lender sends you within three days of application.
What is the APR? Well, it is a percentage rate that takes into account the various loan charges, and not just the interest rate that is used to calculate your monthly payment. Among the many charges are included loan discounts, origination fees, prepaid interest, and other credit costs. The APR generally offers a true reflection on the true cost of the mortgage loan you are borrowing.
What are the other things that help you understand the cost of your mortgage loan?
The Truth-in-Lending Disclosure Statement also includes the finance charge and the payment schedule. With these pieces of information, it will be easy for you to understand the amount you need to pay every month and how your payments can help amortize your mortgage.
An amortization schedule reveals the total amount you will need to pay to remove the lien on your property. You will get to know how much extra you will be paying over the term of the loan. It will help you take an informed decision and also compare with the offers of other lenders.