Steve Hatfield - Dearborn Michigan Realtor - Century21 Curran and Christie - DearbornHomes.com

Steve Hatfield, Realtor, ABR, CRS, e-PRO

Dearborn Michigan Home Buying Guide
Tips and Advice for Dearborn Michigan Home Buyers

The Truth in Lending Act, more commonly referred to as Regulation Z, is part of the Consumer Credit Protection Act. Its purpose is to promote the informed use of consumer credit by requiring disclosures about credit terms and costs.

Please select a topic below to find the answers to some of the most commonly asked questions about the "Truth in Lending Disclosure."


			What is a "Truth-In-Lending Disclosure?" Soon after you have applied for your mortgage, you will receive a "Truth-in-Lending Disclosure". The APR (Annual Percentage Rate) is not your actual interest rate. The APR is simply the net yield to the lender. It includes your interest, discount fees, and other costs that you pay up front. Your mortgage note at closing will reflect the actual interest rate you will pay. Close Answer

			What is the ANNUAL PERCENTAGE RATE? The Annual Percentage Rate (APR), is the cost of your credit expressed as an annual rate. Because you may be paying loan discount points and other prepaid finance charges at closing, the APR disclosed is often higher than the interest rate on your loan. This APR can be compared to the APR on other loan programs to give you a consistent means of comparing rates and programs. Close Answer

			Why is the annual percentage rate different from my interest rate? The APR is computed from the Amount Financed and based on what your proposed payments will be on the actual loan amount credited to you at settlement. In a $50,000 loan with $2,000 Prepaid Finance charges, a 30 year term, and a fixed interest rate of 12%, the payments would be $514.31 (principal and interest). Since the APR is based on the Amount Financed ($48,000), while the payment is based on the actual amount given ($50,000), the APR (12.553%) is higher than the interest rate. Close Answer

			What is the FINANCE CHARGE? The Finance Charge is the cost of credit expressed in dollars. It is the total amount of interest calculated at the interest rate over the life of the loan, plus Prepaid Finance Charges and the total amount of any required mortgage insurance charges over the life of the loan. Close Answer

			What is the AMOUNT FINANCED? The Amount Financed is the loan amount applied for, minus the Prepaid Finance Charges. Prepaid Finance Charges include items paid at or before settlement, such as loan origination, commitment or discount fees (points), adjusted interest, and initial mortgage insurance premium. The Amount Financed is lower than the amount you applied for because it represents a NET figure. If you applied for $50,000 and the Prepaid Finance Charges total $2,000, the Amount Financed would be $48,000. Does this mean I will get a smaller loan then I applied for? No. If your loan is approved in the amount requested, you will receive credit toward your home purchase or refinance for the full amount for which you applied. Close Answer

			What is the TOTAL OF PAYMENTS? This figure represents the total amount you will have paid if you make the minimum required payments for the entire term of the loan. This includes principal, interest and mortgage insurance premiums, but does not include payments for real estate taxes or property insurance premiums. Close Answer

			If I pay the loan off early, will I be entitled to a refund of part of the finance charge? No. You are charged interest for the period of time in which you used the money loaned to you. Your prepaid finance charges are generally not refundable, nor is any interest which has already been paid. Close Answer

This information is subject to change without notice and is not guaranteed. Consult with your mortgage professional or legal counsel for the most up-to-date information regarding Truth-In-Lending.

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CENTURY 21 Curran & Christie
25636 Ford Road
Dearborn Heights, MI 48127
Office: (313) 274-7200
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Michigan Real Estate Salesperson #6501221773
Licensed Realtor® Since 1987

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Steve Hatfield, Realtor® provides real estate / home buying and selling services in Dearborn Michigan, Dearborn Heights Michigan, the Wayne County MI (Southeast Michigan) communities of Redford, Westland, Garden City, Livonia, Canton, Plymouth, Northville and the Oakland County cities of Farmington / Farmington Hills and Novi Michigan.

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Dearborn Michigan Home Buying GuideTips and Advice for Dearborn Michigan Home Buyers

Dearborn Michigan Home Buying Guide
Tips and Advice for Dearborn Michigan Home Buyers