Truth in Lending Disclosure Explanation
Enclosed is a Truth-in-Lending Disclosure, which is required by the Federal Government to be given to you at the time of application. It provides a uniform manner of calculating and presenting the terms of consumer loans to enable you to compare costs so that you can make informed choices about credit. Please take a moment to look at the explanation below before signing the enclosed disclosure. Please note that your signature(s) is/are only an indication that you have received this disclosure, and is NOT an agreement to any contractual arrangement.
The cost of your credit as a yearly rate.
A / FINANCE CHARGE
The dollar amount the credit will cost you.
B / Amount Financed
The amount of credit provided to you or on your behalf
C / Total of
Payments
The amount you will have paid after you have made all payments as scheduled.
D
1. ANNUAL PERCENTAGE RATE (APR) (Box A): The cost of a mortgage stated as a yearly rate; includes such items as interest, mortgage insurance, and loan origination fee (points). Because you may be paying discount points and other prepaid financing charges at closing, the APR disclosed is often higher than the interest rate on your loan.
2. FINANCE CHARGE (Box B): The total of your loan amount minus pre-paid closing costs. Pre-paids include the loan origination fee plus discount points, if any, and interim interest. Interim interest is also known as “pre-paid interest”.
3. AMOUNT FINANCED (Box C): The amount of credit provided to you, or on your behalf. Calculated as the total of your loan amount minus the prepaid closing costs.
4. TOTAL OF PAYMENTS (Box D): The amount you will have paid after you have made all payments as scheduled. This includes principal, interest, and mortgage insurance premiums, but does not include payments for real estate taxes or property insurance premiums.
Please sign the enclosed Truth-in-Lending Disclosure and return the original copy within five (5) business days of receipt. Remember, you are not binding yourself to any contract or agreement. By signing, you are simply stating that you have received the required disclosure.