• The cost of your credit as a yearly rate.

Finance Charge

• The dollar amount the credit will cost you.

• The amount of credit provided to you on your behalf.

• The amount you will have paid after you have made all payments as scheduled.

Q. What is Truth-In-Lending Disclosure, and why do I receive it?
A. The Disclosure is designed to give you information about the cost of your loan so that you may compare these costs with those of other loan programs or lender.

Q. What is the ANNUAL PERCENTAGE RATE?
A. 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. The APR can be compared to the APR on other loan programs to give you a consistent means of comparing rates and programs.

Q. Why is the APR different from the interest rate for which I applied?
A. 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. For instance, for a $50,000 loan with $2,000 prepaid finance charges, a 30-year term, and a fixed interest rate of 12%, the principal and interest payments would be $514.31. Since the APR is based on the Amount Financed ($48,000), while the payment is based on the actual loan amount given ($50,000), the APR (12.553%) is higher than the interest rate.

Q. What is the FINANCE CHARGE?
A. The Finance Charge is the cost of credit expressed in dollars. It includes the total amount of interest calculated at the interest rate over the term of the loan, plus prepaid finance charges and the total amount of any required mortgage insurance charged over the life of the loan.

Q. What is the AMOUNT FINANCED?
A. The Amount Financed is the loan amount applied for, minus the prepaid finance charges. Prepaid finance charges include certain items paid at or before settlement, such as a loan origination fee, commitment or discount fees ("points"), adjusted interest, and initial mortgage insurance premium. The Amount Financed is lower that 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.

Q. Does this mean I will get a smaller loan than I applied for?
A. No. If your loan is approved in the amount requested, you will receive credit towards your home purchase or refinance for the full amount for which you are approved. In the example above, you would, therefore, receive a loan for $50,000, not $48,000.

Q. What is the TOTAL OF PAYMENTS?
A. This figure represents the total amount you will have paid if you make all of the minimum required payments for the term of the loan. The figures includes principal, interest, prepaid finance charges, and mortgage insurance premiums, but does not include payments for real estate taxes or property insurance premiums.

Q. My Disclosure says if I pay the loan off early, I may or may not be entitled to a refund of part of the Finance Charge. What does this mean?
A. This means that you will be charged interest for the period of the time in which you used the money loaned to you. Your prepaid finance charges may or may not be refundable, depending on
if you have paid any finance charges in advance. Normally, the only finance charge you may pay in advance is private mortgage insurance.