Loans By Kathy: FAQ #5 - What is the Truth in Lending statement?

FAQ #5 - What is the Truth in Lending statement?

FAQ #5 - What is the Truth in Lending statement?

 

The Truth in Lending statement often called the TIL, is a uniform disclosure that allows the consumer to make an apples to apples comparison when shopping for financing. 

The APR will be disclosed on not only mortgage financing but also car loans and credit cards.

 

The Truth in Lending form as part of the mortgage package will list the terms of the loan at the top of page, along with the total amount of interest paid over the life of the loan, and the annual percentage rate.  The annual percentage rate (APR) is the effective cost of borrowing that money.

Here is a quick example, let’s say you borrow $50,000 and it costs you 2 points ($1000) for that money.  So you are borrowing $49,000 but must repay $50,000. 

Just to keep the math simple, let’s say it is at 10% amortized over 30 years.  That is the note rate, however, the APR rate will be 10.25%.

 

If you are shopping for a mortgage, be sure to compare apples to apples.

 

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Kathy Sheehan Senior Loan Officer

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770.634.4021

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Bay Equity LLC

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11475 Great Oaks Way, Suite 350, Alpharetta, GA 30002

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The opinions and general information in this blog are soley those of Kathy Sheehan.  Specifics regarding an individual case should be discussed in detail with a loan professional.  For a confidential consultation, please feel free to contact me via phone or email.  All terms and conditions are subject to change.

 

Comment balloon 8 commentsKathy Sheehan • June 03 2012 05:50PM

Comments

I always wonder how many people read the TIL and have any clue what they are signing. LOL. Your post is short and sweet and to the point. Perfect. 

Posted by Shar Sitter, Home Staging and Redesign Minneapolis/ St. Paul, M (Rooms With Style) almost 6 years ago

I am sorry to say, I fear you may be right.  Thanks for the compliment.

Posted by Kathy Sheehan, Senior Loan Officer (Bay Equity, LLC 770-634-4021) almost 6 years ago

I understand it, Kathy, but it is sometimes confusing for consumers...even on credit cards and car loans.

Posted by Suzanne McLaughlin, Sabinske & Associates, Realtor (Sabinske & Associates, Inc. (Albertville, St. Michael)) almost 6 years ago

Actually, this is why I hate shopping for loans.  The APRs and the "extras" make me crazy.

Posted by Ron Marshall, Birdhouse Builder Extraordinaire (Marshall Enterprises) almost 6 years ago

Suzanne, this is the one form I always get questions on from borrowers.

Ron, it can be confusing at times.

Posted by Kathy Sheehan, Senior Loan Officer (Bay Equity, LLC 770-634-4021) almost 6 years ago

Kathy,

That's a good explanation of an APR and Truth in Lending.  As you said, without an APR a borrower can't make an apples to apples comparison. 

Posted by Lloyd Binen, Silicon Valley Realtor since 1976; 408-373-4411 (Certified Realty Services) almost 6 years ago

Thanks Lloyd, it does seem to be a very common question.

Posted by Kathy Sheehan, Senior Loan Officer (Bay Equity, LLC 770-634-4021) almost 6 years ago

I can't tell you the number of times I have had to explain a Truth in Lending statement to a client who was too embarrassed to ask his lender to go over it again.  I am sure that you make them feel comfortable enough to "get it."

Posted by Don Sabinske, Sabinske & Associates Inc. (Don Sabinske, Sabinske & Associates Inc.) almost 6 years ago

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