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The Mortgage Agreement

Document From The Lender

Disclosing All Of Costs

What Are Prepaid Finance Charges?
These include items paid at or before the closing, such as loan origination fees, lock-in fee, discount fee (points), adjusted interest, and the initial mortgage insurance premium.

Disclosing All Of The Costs

Commercial real estate loans.net

Every lender or loan broker must give you a Federal Truth-in-Lending Disclosure Statement. You should receive this document very soon after you apply for a mortgage. The law requiring lenders to provide it was created to help people compare the cost of the loan against the cost of loans from other lenders they might be considering. While it's designed to present your true costs in simplified fashion, many people find it confusing. Here's what it tell you.

ANNUAL PERCENTAGE RATE (APR)

The APR is actual cost you will pay on the loan each year (expressed as a percentage of the amount you borrow). The APR is always higher than the interest rate because it takes into account the fees and other costs, such as the upfront points, that you pay to get the loan. Since fees vary from loan to loan, the APR gives you a standardized number to use as a comparison.

FINANCE CHARGE

This is the cost of the loan expressed in dollars. It includes the total amount of interest you will pay over the full life of the loan, prepaid finance charges, and the total amount of mortgage insurance charged over the life of the loan.

AMOUNT FINANCED

It's the loan amount you applied for, minus the prepaid finance charges. It's lower than the amount you requested because the prepaid finance charges are deducted from the amount you borrow before the check is written. In short, this is the amount of the check the lender writes.

TOTAL OF PAYMENTS

This represents the total amount you will pay if you make the minimum payments on time for the life of the loan. This includes principal, interest, and insurance premiums.

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