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) and total cost of the loan
TILA (Truth in Lending Act) is a federal law that requires lenders to clearly disclose the Annual Percentage Rate (APR), finance charges, total amount financed, and total payments so that borrowers can meaningfully compare loan offers. The APR reflects the true cost of borrowing by including the interest rate plus certain fees, giving consumers a standardized basis for comparison.
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Related Topics & Key Terms
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Related Concepts
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.
In the context of foreclosure, a deed transfers ownership of the foreclosed property to the new owner, typically the buyer at a foreclosure sale.
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