Truth In Lending (TIL)
Definition of "Truth in Lending (TIL)"
The federal law that specifies the information that must be provided to borrowers on different types of loans. Also, the form used to disclose this information. Truth in Lending (TIL) is a great idea, in principle. The idea is to require lenders to provide one uniform set of price disclosures that are consistent from loan to loan and from lender to lender. Then consumers can make apples-to-apples price comparisons across loan types and across lenders. The idea has worked concerning the methodology used to calculate interest cost. Borrowers no longer have to contend with non-comparable ways to calculate interest: discount rates, add-on rates, and internal rates of return. APR: The internal rate of return used to measure interest cost on a mortgage is called the annual percentage rate, or APR. The APR on a mortgage is misleading because upfront fees are a major cost, yet only some of them are included in the APR. In addition, the APR assumes all loans run to term, when in fact most mortgages are paid in full well before term. Subordination Policy on Second Mortgages: Very few borrowers who take out a second mortgage are aware that the second mortgage lender can prevent them from refinancing their first mortgage. When the existing first mortgage is repaid, the existing second mortgage automatically becomes the first mortgage unless the second mortgage lender is willing to subordinate his claim to that of the lender providing the new mortgage into which the borrower is refinancing.
Popular Mortgage Terms
A mortgage that does not meet the purchase requirements of the two federal agencies, Fannie Mae and Freddie Mac, because it is too large or for other reasons, such as poor credit or ...
A borrower who submits applications through two loan providers, usually mortgage brokers, without their knowledge. Home purchasers sometimes submit more than one loan application as a way ...
A contribution to a borrower's down payment or settlement costs made by a home seller, as an alternative to a price reduction. ...
A mortgage that can be moved from one property to another. Ordinarily, you repay your mortgage when you sell your house and take out a new mortgage on the new home you purchase. With a ...
A mortgage on which all settlement costs except per diem interest and escrows are paid by the lender and/or the home seller. A no-cost mortgage should be distinguished from a ...
The maximum allowable increase in the interest rate on an ARM each time the rate is adjusted. It is usually one or two percentage points. ...
The provision of the U.S. tax code that allows homeowners to deduct mortgage interest payments from income before computing taxes. Points and origination fees are also deductible, but not ...
One of many interest rate indexes used to determine interest rate adjustments on an adjustable rate mortgage. ...
A measure of interest cost on a reverse mortgage. ...
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