Truth in lending statement financed amount doesn't equal loan amount in GFE?

Question

I've received the paperwork for my mortgage and the loan amount in the good faith estimate is $275.5k but the truth in lending disclosure says that the amount financed is 270.7k. Is there something funny going on here?

Answer 1

Not at all. They are always different. Don't you worry about this. However, since you have questions about this, you should seek a detailed-in-firgures answer from your Loan Officer, who is suppose to explain everything that their borrowers concern.

Answer 2

Not necessarily. You may be reading the documents wrong.

The good faith estimate is going to include the closing costs, and that will be paid at closing.

The truth-in-lending will only include the amount actually FINANCED which is equal to the loan amount.

However, what you SHOULD be looking at is the APR on the TIL in relation to your note rate...that is the best indication of the true cost of the loan. Unless you are experienced in reading GFE's, they can slip in a Yield Spread Premium and they are hard to spot b/c they are built into the rate and the exact dollar amount DOES NOT appear on the GFE...it's in the APR on the TIL and it is a cost of the loan.

If you already have a contract, then the GFE should not vary by more than $500 at closing. There is no reason why they cannot know your taxes, your insurance, the escrow amounts (if you are escrowing taxes and insurance), your per diem interest (if you have your target closing date), etc.

Too many lazy mortgage brokers rely on that "estimate" word to get out of doing a thorough job. If you were to call the Banking Commission of your state, unless something changes with the contract or closing date, that "estimate" word won't get them out of hot water for failure to disclose properly, and $500 is the guideline and they will sanction your license for being "off" by $1000 or more if a consumer complains.

Answer 3

This is normal.

Some things aren't considered part of the amount financed on the Truth In Lending. Like tax & insurance escrows, for instance. But they still have to be included on the Good Faith Estimate as they're part of the total loan amount.

Answer 4

The amount financed is the loan amount applied for less the prepaid finance charge. Prepaid finance charges can be found on the Good Faith Estimate. For example, if the borrower's note is for $100,000 and the Prepaid Finance Charges total $5,000, the amount financed would be $95,000.

The amount financed is calculated by:

1. Determining the principal loan amount or the cash price (subtracting any down payment);
2. Adding any other amounts that are financed by the credit and are not part of the finance charge;
3. Subtracting any prepaid finance charge.

Calculation:
Loan Amount 203,250 - Prepaid Finance Charge 6,287.00 = Amount Financed 196,963.00

Answer 5

loan amount in the good faith estimate is $275.5k

That should be the total amount of the note including finance charges. ????? 5 K ??????, seems low.
the amount financed is 270.5k.

Should be the principal amount of the morgtage before interest.

Monthly payments should equal the loan amount of 275.5K.

If the difference of 5K is "other fees", (like closing costs), and not the interest, you should know and ask what that amount represents.

It appears to me that the principal is 270.5K.
The difference, 5K, is closing costs. being financed,
for a total of 275.5K, plus interest.

Look at your statement and be sure this is clear.

If 275.5K is the actual amount being financed, then interest will be added to that.
Get that clarified ASAP.

Answer 6

The GFE is the estimated amount that the mortgage broker or lender originally set the loan amount at and it is an estimate. The TIL showing you the final amount financed. Maybe you did not need the total amount that you originally applied for.

Answer 7

There are loan fees and costs involved with every loan. You generally have two choices: a) pay those costs out of pocket or b) finance them.

In your case at lease some, if not all, of your costs are being financed. The $5k should be detailed on another statement but would include things like "loan origination" fees, filing fees, appraisals, document fees etc.

I hope this helps.

Answer 8

The T-i-L delivers the APR that's composed of the interest fee on the loan itself, plus the financed costs all mixed as a more suitable interest fee to supply you the belief of no longer purely the direct interest rates, yet how lots greater your loan is actual costing you which comprise the financed costs. The T-i-L itself will wreck down which ultimate costs are secure interior the financing rates.

Answer 9

nope. no funny business going on. the Truth in Lending document lists the lower amount on a purchase transaction since it backs out the loan related fees that you are bringing to the closing table. your loan amount will still be the $275.5k. (i was in the mortgage business for 11 years and still don't have a clear understanding as to why it is done that way).

Answer 10

Are you paying for something that they thought would be financed?

Call your loan officer. You want this cleared up before the closing!

ASK ASK ASK questions, This is the biggest financial deal of your life, or one of them at least. DO NOT sign unless you understand!

Our first two closings actually got stopped in the middle and restarted days later because my husband was not satisfied with an answer. It was very humilating to me, the "experts" on the other side try to soothe us like toddlers, but I came to realize my husband was doing what good husbands do-PROTECTING our family. (Both issues were resolved easily).

Good luck!