The Truth-in-Lendingi, or "TiLii," disclosure, is a government-required summary of the main terms and features of the mortgagei loan you are obtaining. As with the Good Faith Estimate, the residential loan borroweri must receive a preliminary TiL disclosure at time of applicationi, or within three days thereafter.
Updated TiL disclosures should be provided as figures and features are updated. At the closingi, the borrower will be provided with the final TiL disclosure, which will be based on the final closing costsi and loan terms.
Essentially, the TiL disclosure provides the borrower with an overall view of the cost of the loan. Whereas the good faith estimate provides an itemization of the loan's closing costs, the TiL reviews the cost of the loan over its term of 10, 15, 20 or 30 years, as the case may be. The TiL provides a clear summary of the most important elements of the proposed loan. It also provides the borrower with simple tool with which to compare one loan with another.
The main body of the TiL disclosure can be divided into two sections:
- Summary of Loan-Related Costs
- Review of Loan Features and Restrictions
This section is perhaps the most important portion of the Truth-in-Lending form. It provides the borrower with an often breath-taking summary of the long-term cost of this loan. This section has five important elements that the lender must calculate and provide:
- Annual percentage ratei (APR)
- Total finance chargei
- Amount financed
- Total of payments
- Schedule of payments
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Annual Percentage Rate |
Finance Charge |
Amount Financed |
Total of Payments |
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APR: The cost of your crediti as a yearly rate. |
The dollar amount that the credit will cost you. |
The amount of credit provided to you or on your behalf. |
The amount you will have paid after making all payments as scheduled. |
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Finance Charge + Amount Financed = Total of Payments |
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Number of Payments |
Amount of Payments |
When Payments Are Due |
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YOUR PAYMENT |
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SCHEDULE |
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WILL BE |
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The second portion of the TiL disclosure summarizes the main features and restrictions of the proposed loan. It cannot cover all the details, nor does it attempt to do so. Instead, this section attempts to provide a summary that the borrower can then use for comparison or review purposes.
This section normally contain at least eight elements:
