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After you apply for a loan, the lender must give you a Truth-in-Lending (TIL) disclosure statement. The TIL statement spells out the costs associated with your loan:
- Annual percentage rate (APR). This expresses the totality of your loan costs: its interest rate plus various lender fees and closing costs.
- Finance charge. This tells you, in dollars and cents, how much the loan will cost you if you pay it off over its full term.
- Amount financed. Confirm that this is the amount that you're borrowing.
- Total payments. This amount shows you how much you'll pay in principal and interest over the full term of the loan.
- Other information about your loan. Your TIL statement notes other information about this loan, such as whether it has a variable rate (if so, you get a separate ARM disclosure), whether there's a prepayment penalty, whether the loan is assumable, whether the lender can demand payment in full on a certain date (baloon loan), and what filing fees and late charges are.
Because some of the information on your TIL statement can change between the time you apply and the time you close (or lock in your rate), the lender must give you a revised TIL statement before closing.
