When obtaining a home loan, you’ll receive two important documents from your lender: a loan estimate and a closing disclosure. On the surface, these documents are very similar, but they both serve different purposes. Here’s what you need to know about the differences between these two forms and what each means for you:
Understanding Final TIL Statements for a Kansas City Home Loan
A truth in lending disclosure statement, or “TIL,” is a document that lenders are required to provide to all loan applicants. It discloses all costs associated with making and closing a mortgage. Within three days of submitting your mortgage application, you will received a TIL statement to review. Your final TIL statement must be prepared and available to you three days prior to closing your new Kansas City home loan.
Purposes of a TIL Disclosure
TIL disclosures for Kansas City home loans protect consumers by:
- Requiring the disclosure of all costs and terms of credit
- Creating uniform standards for stating credit costs, which encourages you to compare the costs of loans offered by different lenders
- Ensuring advertising for credit is truthful
Unlike a good faith estimate which discloses the cost of the entire transaction, a TIL statement only presents the cost of the loan. Your final TIL statement will include five primary sections:
Your Annual Percentage Rate (APR)
Your APR, or the cost of your credit for your Kansas City home loan, is calculated as a percentage. The final percentage includes:
- Finance charges
- The loan’s interest rate
- Required mortgage insurance
- The amount of prepaid finance charges at or before the loan closing
Your Finance Charge
Your finance charge is the total amount of interest incurred over the loan’s lifetime. In addition, it includes any prepaid finance charges and mortgage insurance premiums.
The Amount Financed
The amount financed is the amount of credit provided to you by your lender. This amount excludes any prepaid finance charges.
Your Payment Schedule
A payment schedule outlines your loan term and any special features of your Kansas City home loan, including:
- Specific payment dates
- The dollar amount of payments
- The date and amount of the first and last payment
Total payment is the amount of money that will be paid at the end of the loan term if every payment is made on time.
Before signing your final TIL statement, make sure to look over all details and compare it to the initial statement. This will help you find any major discrepancies or differences.