Under the Truth in Lending Act (TILA), lenders are required to disclose which of the following to borrowers?
Correct Answer
B) The Annual Percentage Rate (APR) of the loan
TILA requires lenders to disclose the Annual Percentage Rate (APR), which reflects the true cost of borrowing by including the interest rate plus fees and other loan costs expressed as a yearly rate. This allows consumers to make informed comparisons between loan offers. TILA disclosures must be provided before the borrower becomes obligated on the loan.
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Related Topics & Key Terms
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Key Terms:
Related Concepts
Closing costs are the fees and expenses paid by the buyer and seller at the closing of a real estate transaction, beyond the purchase price. They typically range from 2-5% of the purchase price.
A conventional loan is a mortgage that is not insured or guaranteed by a government agency such as the FHA, VA, or USDA. It is originated and funded by private lenders and may be conforming or non-conforming.
The debt-to-income ratio (DTI) compares a borrower's monthly debt obligations to their gross monthly income. It is used by lenders to determine how much mortgage a borrower can afford.
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