| Q. |
WHAT IS A TRUTH-IN-LENDING
DISCLOSURE STATEMENT? |
| A. |
The Truth-In-Lending Disclosure Statement
("Disclosure") is a document that provides you
with information about the effective cost of your loan. This
Disclosure must be provided to you in accordance with regulatory
requirements to allow you to make a comparison of costs associated
with your financing. |
| Q. |
WHAT IS THE ANNUAL PERCENTAGE
RATE? (BOX "A" ABOVE) |
| A. |
The Annual Percentage Rate ("APR)
is the cost of your loan expressed as a yearly rate. The
APR provides you with the ability to compare the cost of
your loan among lenders, by taking into consideration commitment
fees ("points"), private mortgage insurance premiums
(if applicable) and other prepaid finance charges (loan discount,
origination fees, prepaid interest and other loans costs
paid) at closing. This is not the Note rate for which you
applied. |
| Q. |
WHY IS THE ANNUAL PERCENTAGE
RATE DIFFERENT FROM THE INTEREST RATE THAT I APPLIED
FOR AND LOCKED-IN? |
| A. |
Since other loan costs are required to
be included in the calculation of the APR, it is generally
higher than the interest rate for the mortgage. The APR is
calculated using the Amount Financed (Box C), along with
your actual monthly payment for the loan amount credited
to you at closing. This results in a different interest rate
called the APR.
*For example: A $200,000 loan for a 30 year term at
a fixed interest rate of 7%, with $4,000 of prepaid finance
charges, would require a monthly principal and interest
payment of $1,330.61. The Amount Financed of $196,000 and
the payment of $1,330.61, based on the actual mortgage
amount of $200,000 results in a APR of 7.20%, which is
higher than the interest rate for the mortgage. |
| Q. |
WHAT IS THE FINANCE CHARGE?
(BOX "B" ABOVE) |
| A. |
The Finance Charge represents the total
dollar amount of interest you will have to pay over the full
term of the loan. It is calculated using the interest rate
for the term of the loan, plus prepaid finance charges and
the total amount of any required private mortgage insurance
premiums (if applicable). It can also be stated in another
way:
Total of Payments + Prepaid Finance Charges - Repayment of
Principal = Finance Charges. |
| Q. |
WHAT IS THE AMOUNT FINANCED?
(BOX "C" ABOVE) |
| A. |
The Amount Financed is the net loan amount.
It is determined by subtracting prepaid finance charges from
the amount of the loan requested.
*For example: If your loan is $200,000 and your prepaid finance
charges are $4,000, then the amount financed would be $196,000.
This is one of the figures used in calculating the APR. |
| Q. |
DOES THIS MEAN THAT I WILL
GET A SMALLER LOAN THAN I APPLIED FOR? |
| A. |
No. If you loan is approved for the amount
you requested, you will receive the full amount of loan proceeds. |
| Q. |
WHAT IS THE TOTAL OF PAYMENTS?
(BOX "D" ABOVE) |
| A. |
The Total of Payments represents the
total dollar amount you will have to pay over the entire
term of the loan. This amount includes the repayment of
principal, interest, private mortgage insurance (if applicable),
but does not include payments for real estate taxes or
hazard insurance premiums, and is calculated as follows:
Total Number of Payments X Payment Amount = Total of Payments.
If your loan is an adjustable rate loan, your Total
of Payments will reflect only the payments you would
make under the current economic conditions (assuming
your index does not change). For more details about your
adjustable rate mortgage, please refer to your ARM Disclosure. |
| Q. |
MY DISCLOSURE SAYS THAT IF
I PAY THE LOAN OFF EARLY, I WILL 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 time you use the money loaned to you. Your
prepaid finance charges and any interest which has already
been paid are not refundable.
*The example used above is for informational and illustrative
purposes only and is not based on the rates or fees applicable
to your particular loan. |
