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What Is A Truth In Lending Statement For A Home Mortgage?

By Jim Micheals

Tips to help you understand what a truth in lending statement actually means

Most homeowners do not truly understand all of the ins and outs of their home mortgage, but the good news is that there is a very important document that is required by law to be reviewed and it is called a truth in lending statement. In looking over a truth in lending statement, there are several important components that must be paid attention to.

Interest Rate and APR Must Be Included on Truth in Lending Statement For a Home Mortgage

While it is important to understand what the interest rate is on a home mortgage, it is necessary to realize that the APR is actually a reflection of the cost of the loan. In contrast to the interest rate, the APR is higher and includes loan fees, closing costs, and any other additions.

Total Amount of Payments Must Be Included on Truth in Lending Statement For a Home Mortgage

The majority of borrowers are shocked when they realize how much money must actually be paid back, and this is an important component of the truth in lending statement.

Interest Rate Type Must Be Included on Truth in Lending Statement For a Home Mortgage

Although many homeowners are accustomed to paying attention to what rate of interest they will be paying on their home mortgage, few understand that it is important to know whether the rate is fixed or adjustable. Adjustable rates may increase significantly and a truth in lending statement will disclose this possibility when applicable.

A loan closing is often an exciting process and many people view the truth in lending statement as another piece of paper that must be signed, but smart consumers will take the time to review the various components in an effort to truly understand their new home mortgage.

Related posts:

1. What Is A Good Faith Estimate For A Home Mortgage?
2. What Is PMI For A Conventional Home Mortgage Loan?
3. What Responsibilities Do I Have During The Mortgage Lending Process?
4. How Can I Save On Closing Costs For My Home Mortgage?
5. Should I Build A New Home With Today’s Mortgage Rates?