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) reflecting the true cost of the loan
TILA (Truth in Lending Act) is a federal law that requires lenders to disclose the Annual Percentage Rate (APR) and other key loan terms to borrowers before consummation of the loan. The APR reflects the true cost of borrowing by including the interest rate plus fees and other charges, expressed as a yearly rate. This allows borrowers to make informed decisions and compare loan offers on an equal basis. TILA disclosures are now delivered through the Loan Estimate and Closing Disclosure forms under the TRID rule.
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Related Topics & Key Terms
Related Topics:
Key Terms:
Related Concepts
An adjustable-rate mortgage (ARM) has an interest rate that changes periodically based on market conditions, typically after an initial fixed-rate period. The rate adjustment is tied to a financial index plus a margin.
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.
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