TRUTH IN LENDING DISCLOSURE
Required by Federal Law, this is used to provide the borrower with meaningful disclosure of credit terms so they will be able to more readily compare various credit terms available and, to ensure the informed use of credit by the consumer.
SIGNATURES: Signed by everyone that will sign the Note and anyone else who has the right to cancel / right to rescind the transaction, and delivered to the signers "before" the Note and Security Instrument / Mortgage / Deed of Trust are signed.
NOTARY: Not required.
Definition of the Truth in Lending Disclosure Terms:
ANNUAL PERCENTAGE RATE
The Annual Percentage Rate (APR) is the cost of credit expressed as a yearly rate. The APR is a measure of the total cost of credit, including interest, loan discount, origination fees, transaction charges, and premiums for credit-guranteed insurance; it is not an interest rate. The APR relegates the amount and timing of value received by the borrower to the amount and timing of payments made by the borrower. The APR is designed to take into account all relevant factors and to provide a uniform measure for comparing the costs of similar credit transactions.
FINANCE CHARGE
The finance charge is the dollar amount the credit will cost you. It is the total amount of interest paid over the term of the loan, plus prepaid finance charges, defined below, plus the total amount of any required mortgage insurance charged during the term of the loan.
PREPAID FINANCE CHARGES
Prepaid finance charges are finance charges imposed in connection with the loan that are paid prior to or at loan closing or withheld from the loan proceeds at any time. These charges include, but are not limited to, points discounts, origination, and processing fees, per diem interest paid at or before closing. In a real estate secured transactions, some charges may be excluded from the calculation of prepaid finance charges; e.g. amounts paid for title insurance, notary public, credit report, appraisal, flood determination and pest inspection.
AMOUNT FINANCED
The amount financed is the amount of credit provided to you or on your behalf. The amount financed is calculated by taking the loan amount shown on the note and subtracting any prepaid finance charge. Thus, the amount financed is not necessarily equal to the loan amount. E.g., if you must pay a 1% origination fee (a prepaid finance charge) on a $100,000 residential mortgage loan at closing, the loan amount is $100,000 but the amount fiance is $99,000 ($100,000 minus the $1,000 loan origination fee).
TOTAL OF PAYMENTS
The total of payments is the amount you will have paid after you have made all scheduled payments. It includes the total of payments of principal, interest, and mortgage insurance, if applicable. It does not include amounts paid prior to or at loan closing or withheld from the loan prceeds.
