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Terms in this set (127)
Loan estimate
The Loan Estimate is designed to provide information to help borrowers understand the key features, costs, and risks of the mortgage loan for which they are applying. Generally, the Loan Estimate requires the disclosure of categories of information that will vary due to the type of loan, the payment schedule of the loan, the fees charged, the terms of the transaction, and state law provisions. The Loan Estimate must be provided to borrowers no later than three business days after they submit a loan application. The format of the Loan Estimate and the required content and disclosures are described in Reg. Z, 12 CFR §1026.37The Loan Estimate must be used for most closed-end mortgages. Home equity lines of credit, reverse mortgages, or mortgages secured by a mobile home or by a dwelling that is not attached to real property (i.e., land) must continue to use current disclosure forms required by TILA and RESPA separately. Any transaction that is a federally related mortgage loan under Regulation X, 12 CFR 1024.2, must be made using the standard Loan Estimate Form (H-24).
7 day waiting period
When there is a changed circumstance after the Loan Estimate has been provided, the lender can revise the Loan Estimate within 3 business days. Lenders must allow applicants to have a 7-business day waiting period after mailing or delivering the Loan Estimate prior to closing the loan. Therefore, a revised Loan Estimate usually can be provided no later than 7 business days before consummation.
Six Required Items for an Application to be Considered Received
Borrower's name
Borrower's income
Borrower's Social Security number to obtain a credit report
Address of the property
Estimate of the value of the property
The mortgage loan amount sought
date issued
The Date Issued is the date the Loan Estimate is mailed or delivered to the borrower.
applicants
Applicants include the name and mailing address of the borrower(s) applying for the loan. Use each Applicant's name and mailing address if there are multiple Applicants. An additional page may be added to the Loan Estimate if the space provided is insufficient to list all of the Applicants
Property
Write the address of the Property including the zip code that will secure the transaction. If the address of the Property is unavailable, use a description of the location of the property, such as a lot number. Always use a zip code. Personal property such as furniture or appliances that also secures the credit transaction may be included as Property. However, an additional page may NOT be appended to the Loan Estimate to disclose a description of personal property.
Sale Price or Property Value
If the loan is for a purchase money mortgage, use Sale Price. However, if the loan is for a transaction without a seller, use Prop. Value. If personal property is included in the sale price of the property, use that price without any reduction for the appraised or estimated value of the personal property
loan term
Loan Term is the term of the debt obligation stated in years or months, or both, as applicable. Describe the Loan Term as "years" when the Loan Term is in whole years.
Example: 1 year or 30 years.
For a loan term that is more than 24 months but is not whole years, describe using years and months with the abbreviations "yr." and "mo.", respectively.
Example: A loan term of 185 months is stated 15 yr., 5 mos.
For a loan term that is less than 24 months and not whole years, use months only with the abbreviation "mo".
Example: 6 mo. or 22 mo.
purpose
This section describes the borrower's Purpose or intended use for the loan—purchase, refinance, construction, or home equity loan.
purchase
Purchase is stated if the loan will be used to finance the Property's acquisition.
refinance
Refinance is stated if the loan will be used to refinance an existing obligation that is secured by the Property (even if the lender is not the holder or servicer of the original obligation).
construction
Construction is stated if the loan will be used to finance the initial construction of a dwelling on the Property indicated on the Loan Estimate.
home equity loan
Home Equity Loan is stated if the loan will be used for any other purpose.
Adjustable rate
Adjustable Rate. An interest rate is an adjustable rate if the interest rate may increase after consummation, but the rates that will apply or the periods for which they will apply are not known at consummation.
Each description must be preceded by the duration of any introductory rate or payment period, and the first adjustment period, as applicable.
Example: A product with an introductory rate that is fixed for the first five years and adjusts every three years starting in year 6 is a 5/3 Adjustable Rate.
When there is no introductory period for an Adjustable Rate, disclose "0".
Example: A product with no introductory rate that adjusts every year after consummation is a 0/1 Adjustable Rate.
step rate
Step Rate. An interest rate is a step rate if the interest rate will change after consummation and the rates that will apply and the periods for which they apply are known at consummation.
Each description must be preceded by the duration of any introductory rate or payment period, and the first adjustment period, as applicable.
Example: A product with a step rate that lasts for ten years, adjusts every year for five years, and then adjusts every three years for the next 15 years is a 10/1 Step Rate.
When there is no introductory rate for a step rate, disclose "0" and then the applicable time until the first adjustment.
refinance
Refinance is stated if the loan will be used to refinance an existing obligation that is secured by the Property (even if the lender is not the holder or servicer of the original obligation).
construction
Construction is stated if the loan will be used to finance the initial construction of a dwelling on the Property indicated on the Loan Estimate.
refinance
Refinance is stated if the loan will be used to refinance an existing obligation that is secured by the Property (even if the lender is not the holder or servicer of the original obligation).
fixed rate
Fixed Rate. An interest rate is a fixed rate if the interest rate is not an adjustable rate or step rate.The second piece of information is any payment feature that may change the periodic payment, which includes negative amortization, interest only, step payment, balloon payment, or seasonal payment.
Example: A payment feature where there is a five-year period during which the payments cover only interest, and are not applied to the principal balance, would be disclosed as a 5 Year Interest Only for the payment feature.
negative Amortization
egative Amortization When the principal balance of the loan increases due to the addition of accrued interest to the principal balance, negative amortization occurs.
interest loan
nterest Only. One or more regular periodic payments are applied only to interest accrued and not to the principal of the loan.
step payment
Step Payment. The scheduled variations in regular periodic payment amounts occur that are not caused by changes to the interest rate during the loan term.
balloon payment
Balloon Payment. A balloon payment occurs when the terms of the legal obligation include a payment that is more than two times that of a regular periodic payment.
Seasonal Payment.
The terms of the legal obligation expressly provide that regular periodic payments are not scheduled between specified unit- periods on a regular basis.Example: A loan made to a teacher that does not require monthly payments during summer months has a Seasonal Payment.
loan type
Loan Type is the type of the loan that is offered to the borrower, such as Conventional, FHA, VA, or Other.
Conventional loans
Conventional loans are not guaranteed or insured by a Federal or State governm
FHA loans
FHA loans are insured by the Federal Housing Administration,
VA loans
VA loans are guaranteed by the U.S. Department of Veterans Affairs
Other loans
Other loans are loans that are insured or guaranteed by another Federal or a State agency.
loan identification number (Loan ID #)
The loan identification number (Loan ID #) is the lender's loan identification number that may be used by a lender, borrower, and other parties to identify the transaction. The Loan ID # may contain alphanumeric characters and must be unique to the particular transaction. The same Loan ID # may not be used for different, but related, loan transactions (such as different loans to the same borrower). When a revised Loan Estimate is issued, the Loan ID # must be sufficient to identify the transaction associated with the initial Loan Es
rate lock
This section indicates with the interest rate is locked. Indicate the rate is locked with 'Yes' or not locked with 'No'.
When the interest rate is locked at the time of the Loan Estimate's delivery, the date and time (including the applicable time zone) when the lock period ends must be disclosed.
The interest rate, any points, and any lender credits may change unless the interest rate has been locked, and the date and time (including the applicable time zone) at which estimated closing costs expire must be disclosed on every Loan Estimate.
loan terms table
The Loan Terms Table has descriptions of applicable information about the loan—(1) Loan Amount, (2) Interest Rate, (3) Monthly Principal and Interest, the presence of (4) Prepayment Penalty or (5) Balloon Payment, whether the (6) Loan can Adjust after Consummation, and (7) Details about the Prepayment Penalty or Balloon Payment (if present).
loan amount
The Loan Amount is the amount of credit to be extended under the terms of the promissory note (legal obligation).
interest rate
The Interest Rate is the rate that will be applicable to the transaction at consummation. For an adjustable rate transaction, if the initial Interest Rate is not known at consummation, the fully indexed rate is disclosed.
fully indexed rate
fully indexed rate is the interest rate calculated using the index value and margin at the time of consummation.
Balloon Payment
Balloon Payment is a payment that is more than two times a regular periodic payment.
The Principal and Interest Payment
The Principal and Interest Payment is the initial periodic payment amount that will be due under the terms of the legal obligation. The initial principal and interest payment amount also would be calculated using the fully indexed rate.
A Prepayment Penalty
is a charge imposed for paying all or part of a transaction's principal before the date on which the principal is due. It does not include a waived third-party charge that the lender imposes if the borrower prepays the loan's entire principal sooner than 36 months after closing.
Adjustment after Consummation
ometimes after the consummation of a loan, the loan amount, interest rate, and monthly principal and interest payment can be adjusted. This information is described under the subheading, "Can this amount increase after closing?"If the loan amount, interest rate, or monthly principal and interest amounts can increase after consummation, state 'Yes' where applicable with the information pertinent to the adjustment after consummation.
Adjustment to Loan Amount.
Adjustment to Loan Amount. The lender must disclose the maximum principal balance for the transaction and the due date of the last payment that may cause the principal balance to increase. The lender must also disclose whether the maximum principal balance may, or will occur under the terms of the legal obligation. The date disclosed is the year in which the event occurs, counting from the due date of the initial periodic payment.
Adjustment to Interest Rate
Adjustment to Interest Rate. The lender must disclose the frequency of interest rate adjustments, the date when the interest rate may first adjust, the maximum interest rate, and the first date when the interest rate can reach the maximum interest rate. The date disclosed is the year in which the event occurs, counting from the date that interest for the first scheduled periodic payment begins to accrue after consummation. Also, disclose and reference the Adjustable Interest Rate (AIR) Table on Page 2 of the Loan Estimate.
Adjustment to the Monthly Principal and Interest
Adjustment to the Monthly Principal and Interest. The lender would also disclose the scheduled frequency of adjustments, due date of the first adjustment, and the maximum possible amount (and the earliest date it can occur) of the Monthly Principal and Interest. In addition, if there is a period during which only interest is required to be paid, also disclose that fact and the due date of the last periodic payment of such period. The date disclosed is the year in which the event occurs, counting from the due date of the initial payment. Also, disclose and reference the Adjustable For an adjustment in Loan Amount, the lender must Payment (AP) Table on Page 2.When the Loan Amount, Interest Rate, or Monthly Principal and Interest payment CANNOT increase after consummation, state 'No' where applicable.
Details about Prepayment Penalty and Balloon Payment
Any details regarding the presence of a prepayment penalty or balloon payment are written under the subheading, "Does the loan have these features?" If the loan has a Prepayment Penalty or a Balloon Payment state 'Yes', as applicable. When the answer is 'Yes' to either, also disclose, as applicable:
The maximum amount of the Prepayment Penalty and the date when the period during which the penalty may be imposed terminates.
Example: As high as $3,750, if you pay off the loan in the first 2 years.
The maximum amount of the Balloon Payment and the due date of such payment.
Example: You will have to pay $135,500 at the end of year 7.
Projected Payments Table
The Projected Payments Table on the Loan Estimate shows estimates of the periodic payments (or range of periodic payments) that the borrower will make over the life of the loan. Lenders must disclose estimates of the itemized amounts in the Projected Payments Table.
Estimated Amounts Disclosed in the Projected Payments Table
Principal and Interest
Mortgage Insurance
Estimated Escrow
Estimated Total Monthly Payment
Estimated Taxes, Insurance, and Assessments (Even if not paid with escrow funds)
The Projected Payments Table also describes whether taxes, insurance, and other assessments will be paid with funds in the borrower's escrow account.
periodic payment
The periodic payment is the regularly scheduled payment of principal and interest, mortgage insurance premiums, and escrow payments without regard to any final payment that differs from other payments because of rounding to account for payment amounts including fractions of cents.
When dealing with a range of payments, lenders must disclose the initial periodic payment or range of payments.
Initial Periodic Payment
To calculate the Initial Periodic Payment, use the interest rate that will apply at closing, including any initial discounted or premium interest rate. If the interest rate at closing is not known, such as for an adjustable rate loan without an introductory fixed rate period, use the fully indexed rate to determine the initial Periodic Payment.
Subsequent Periodic Payments
If any of the triggering events (i.e., negative amortization, interest only, balloon payment, etc.) may occur during the life of the loan, columns must be added to the table to show the amount of the periodic payments after the triggering event.
Principal and Interest
The Principal and Interest amount or range of such amount may change (for example if the loan has an adjustable rate). Principal and Interest
Negative Amortization.
Negative Amortization. For loans that have a Negative Amortization feature, the Principal and Interest amount may change when the Negative Amortization period ends under the terms of the legal obligation, meaning the borrower must begin making payments that do not result in an increase of the principal balance.
Interest Only
Interest Only. For Interest Only loans, the Principal and Interest amount may change when the Interest Only period ends, meaning the borrower must begin making payments that do not defer repayment of principal.
Minor Periodic Payment
Minor Periodic Payment variations resulting solely from the fact that months have different numbers of days are not triggering events.
There is a scheduled Balloon Payment.
The lender must automatically terminate Mortgage Insurance or any functional equivalent. (Even if the borrower may cancel the insurance earlier, use the date on which the lender must automatically terminate Mortgage Insurance coverage under applicable law. Only termination of Mortgage Insurance is a triggering event, while a decline in Mortgage Insurance premiums is not.)
Periodic Payment
When the Periodic Payment amount changes more than once in a single year, show in the subsequent column the Periodic Payment amounts in the year following the one in which there were multiple changes.
Itemization
Each separate periodic payment or range of payments disclosed on the table must be itemized.
Principal and Interest
Use the amount due for Principal and Interest for the period shown in the column heading. If the payment or range of payments includes any payments of interest only, use the phrase 'Only Interest' under the amount of the payment or range of payments.
Adjustable Rate Loans
Generally, calculate Principal and Interest using the maximum payments by assuming that the interest rate will rise as rapidly as possible, taking into account the terms of the legal obligation, including any applicable caps on interest rate adjustments and lifetime interest rate cap. Other laws, such as a State usury law, can set the maximum rate if the legal obligation does not include a lifetime interest rate cap. Calculate the minimum payments by assuming that the interest rate will decrease as rapidly as possible, taking into account any introductory rates, caps on interest rate adjustments, and lifetime interest rate floor.
Adjustable Rate loan
For an Adjustable Rate loan based on an index that has no lifetime interest rate floor, the minimum interest rate is equal to the margin.
Negative Amortization feature
For loans with a Negative Amortization feature, calculate Principal and Interest using the maximum payment amounts after the end of the period during which the principal balance may increase by assuming the maximum principal amount permitted under the terms of the legal obligation at the end of the period. Calculate the minimum payment amount by assuming the interest rate is the minimum possible under the terms of the legal obligation.
Balloon Payment feature
For loans with a Balloon Payment feature that may change depending on previous interest rate adjustments, calculate Principal and Interest using the assumptions for minimum and maximum interest rates described above and show as a range of payments.
Mortgage Insurance
Disclose the maximum amount payable as Mortgage Insurance that corresponds to the Principal and Interest payment shown in the same column. Mortgage Insurance (or any equivalent) includes any mortgage guarantee that provides coverage similar to mortgage insurance (such as a VA-loan guarantee or a USDA guarantee), even if not technically considered insurance under State or other applicable law.
Calculate Mortgage Insurance premiums based on the principal balance that will exist after changes to the interest rate and payment amounts pursuant to the legal obligation. The calculations should take into account any initial discounted or premium interest rate.
Example" For an Adjustable Rate transaction that has a discounted interest rate during an initial five-year period, calculate Mortgage Insurance premiums using a composite rate based on the rate in effect during the initial five-year period and, thereafter, the fully indexed rate, unless otherwise required by applicable law.
If Mortgage Insurance is required, disclose the amount as a rounded number. Disclose the Mortgage Insurance amount that corresponds with the Principal and Interest amount shown in the same column, even if Mortgage Insurance is paid on a different schedule than Principal and Interest.
If Mortgage Insurance is not required, disclose "0".
Estimated Escrow
The escrow disclosure is required only if the lender establishes an escrow account for the payment of some or all of the payment charges.
If an escrow account is required, disclose the amount the borrower will pay into an escrow account each month under the terms of the legal obligation. Use a rounded number.
If an escrow account will not be established, disclose "0".
Estimated Total Monthly Payment
The Total Monthly Payment is calculated by adding the principal and interest, mortgage insurance (in any), and the escrow amounts (if any).
If there is more than one column, calculate the estimated total monthly payment for each column. The total amount is rounded if any of the component amounts are rounded.
Payment Calculation Column Headings
To the right of the Payment Calculation label, as column headings, use the years of the loan during which the payments or ranges of payments shown in that column will apply.
Use a sequence of whole years, counting from the due date of the initial Periodic Payment.
Example: A two-column Projected Payments Table might contain the headings "Years 1-7" and "Years 8-30" if a triggering event occurs 85 months after the due date of the initial Periodic Payment. If a triggering event occurs in the middle of a year, use the next year in sequence as the heading for the subsequent column.
Example: Assume a 30-year loan that requires Interest Only payments for the first 54 months from the due date of the initial Periodic Payment. The column heading for the initial Periodic Payment would be "Years 1-5" and the column heading for the subsequent Periodic Payment would be "Years 6-30" because the triggering event occurs during the 5th year of the loan.
Periodic Payments
For Periodic Payments that may increase based on an adjustment of the interest rate, use the maximum loan term possible under the terms of the legal obligation. To calculate the maximum loan term, assume that the interest rate rises as rapidly as is possible under the terms of the legal obligation, taking into account any applicable interest rate caps.
Number of Columns
The Projected Payments Table may have a maximum of four columns. Generally, if a loan has more than four triggering events, show a range of payments in the fourth column that reflects all remaining periodic payments not shown in the first three columns.
Balloon Payment
A Balloon Payment that is scheduled as a final payment always requires its own column. Use the words "Final Payment" as the column heading. If disclosing the final Balloon Payment means that other triggering events will not fit within the four-column maximum, show the other triggering events as a range of payments in the third column. However, a Balloon Payment that is not a final payment is a triggering event that does not necessarily require its own column.
The automatic termination of Mortgage Insurance generally requires the corresponding periodic payment to be shown in its own column, unless doing so would exceed the four-column maximum. When the automatic termination of Mortgage Insurance need not be shown in its own column, the column showing the next periodic payment or range of payments should show the periodic payment amount without Mortgage Insurance.
Exceptions to All Remaining Periodic Payments in the 4th Column (Continued)
Show a range of payments rather than a single payment when:
There are more triggering events than can be shown in four columns and thus one column must be used to show two or more periodic payment amounts.
More than one of the triggering events occurs in a single year or one of the triggering events occurs in the same year as the initial periodic payment.
The Principal and Interest payment may adjust based on an interest rate index and the rates are not yet known (i.e., for an adjustable rate loan).
For a column that contains a range of payments, show both a minimum and maximum payment using rounded dollar amounts. For an Adjustable Rate loan, use the maximum and minimum interest rates that could apply such as through an interest rate cap.
Ranges of payments are required only for the Principal and Interest amount and the Estimated Total Monthly Payment. Do not show a range of payments for Mortgage Insurance or Estimated Escrow.
Estimated Taxes, Insurance & Assessments
This part of the table is used to disclose the total monthly amount due for Property Taxes, Homeowner's Insurance, charges imposed by a cooperative, condominium, or homeowners association; ground rent; leasehold payments; and certain insurance premiums, or charges if required by the lender. Include these amounts as Estimated Taxes, Insurance & Assessments even if an escrow account will not be established under the terms of the legal obligation.
Homeowner's Insurance
Homeowner's Insurance is any insurance against loss or damage, or against liability arising out of the property. The insurance premiums included as Estimated Taxes, Insurance & Assessments are for credit life, accident, health, or loss-of-income insurance; insurance against loss of or damage to property, or against liability arising out of the ownership or use of property; and debt cancellation or debt suspension coverage.
To calculate the amount of property taxes, homeowner's insurance, and other insurance premiums, use the taxable assessed value of the real property securing the transaction after consummation, including the value of any improvements or construction, to the extent known, and the replacement costs of the property over the first year.
Closing Costs
For transactions without a seller, an Alternative Costs at Closing Table together with an Alternative Calculating Cash to Close Table on Page 2 of the Loan Estimate can be used in place of the Costs at Closing Table (with a seller). The Alternative Costs at Closing Table contains a variation that places checkboxes with Estimated Cash to Close in order to indicate whether the cash is due from or to the borrower. If the Alternative Costs at Closing Table is used, then the Alternative Calculating Cash to Close on Page 2 of the Loan Estimate also must be used.
closing costs details
Closing Costs Details, which is subdivided into the Loan Costs, Other Costs, Calculating Cash to Close, the Adjustable Payment (AP Table (if applicable) and the Adjustable Interest Rate (AIR) Table (if Applicable).
A good-faith itemization of the Loan Costs and Other Costs associated with the loan. (§ 1026.37(f)-(g)].
A Calculating Cash to Close Table that shows how the amount of cash needed at closing is calculated. (§ 1026.37(h))
For transactions with adjustable monthly payments, an Adjustable Payments (AP) Table with relevant information about how the monthly payments will change. (§ 1026.37(i))
For transactions with adjustable interest rates, an Adjustable Interest Rate (AIR) Table with relevant information about how the interest rate will change. (§ 1026.37(j))
The items associated with the mortgage are broken down into two general types, Loan Costs and Other Costs. The amounts disclosed in the Loan Costs and Other Costs Table are rounded to the nearest whole dollar. The daily amount of Prepaid Interest and the monthly amounts for the items in the Initial Escrow Payment at Closing in the labels are not rounded, but the calculated amounts for those items are rounded to the nearest whole dollar.
loan costs
Generally, Loan Costs are those costs paid by the borrower to the lender and third party providers of services the lender requires to be obtained by the borrower during the origination of the loan.
Origination Charges
Origination Charges are items the borrower will pay to each lender and loan originator for originating and extending credit. First, include the amount paid, if any, by the borrower to the lender to reduce the interest rate (sometimes referred to as points) as both a percentage of the loan amount and a dollar amount. If no points are charged, then leave blank both the percentage of points stated in the label and the dollar amount.
The dollar amounts must be rounded to the nearest whole dollar and the percentage amounts must be disclosed as an exact number up to two or three decimal places, unless the percentage is a whole number.
Services You Cannot Shop For
Services You Cannot Shop For are items provided by persons other than the lender or mortgage broker that the borrower cannot shop for and will pay for at settlement. Items listed as Services You Cannot Shop For must use terminology that describes each item, and disclose them in alphabetical order.
Items Included under Services You Cannot Shop For Subheading
Appraisal fee
Appraisal management company fee
Credit report fee
Flood determination fee
Government funding fee (such as a VA or USDA guarantee fee or any other fee paid to a government entity as part of a governmental loan program)
Homeowner's association certification fee
Lender's attorney fee
Tax status search fee
Third-party subordination fee
Title - closing protection letter fee
Title - lender's title insurance policy
An upfront mortgage insurance fee (unless the fee is a prepayment of future premiums or a payment into an escrow account)
other cost
Other Costs include taxes, governmental recording fees, and certain other payments involved in the real estate closing process. Other Costs are established by government action, determined by standard calculations applied to ongoing fixed costs, or based on an obligation incurred by the borrower independently of any requirement imposed by the lender. Other items that are required to be paid at or before closing pursuant to the contract for sale between the borrower and a seller are disclosed on the Loan Estimate to the extent the lender has knowledge of those items when it issues the Loan Estimate.
Other Costs must be disclosed in the order listed in the regulation, with any additional items listed in alphabetical order in subsequent lines of the applicable subheading.
An addendum to the Loan Estimate cannot be used for additional items on the Other Costs Table. If all the charges cannot be itemized in the number of lines provided in a subheading of the Other Costs Table, the total of those items that exceed the number permitted are disclosed with the label "Additional Charges" on the last line of that subheadingDisclose Other Costs under four subheadings, each of which is subtotaled: Taxes and Other Government Fees, Prepaids, Initial Escrow Payment at Closing, and Other. Total Other Costs is the sum of these four subtotals.
Taxes and Other Government Fees
Under the Taxes and Other Government Fees subheading, disclose Recording Fees and Other Taxes first and Transfer Taxes second.
Recording Fees and Other Taxes are fees assessed by a government authority to record and index the loan and title documents as required under State or local law, together with any charges or fees imposed by a State or local government that are not Transfer Taxes. Recording Fees and Other Taxes do not include fees that are based on the Sale Price of the Property or Loan Amount.
Example: A fee for recording a subordination that is $20, plus $3 for each page over three pages is included as Recording Fees and Other Taxes; but a fee of $1,250 based on 0.5% of the Loan Amount is included as Transfer Taxes, and not included as Recording Fees and Other Taxes.
Transfer Taxes are State and local government fees on mortgages and home sales that are based on the Loan Amount or Sale Price of the Property. The name that is used under State or local law to refer to these amounts is not determinative of whether or not they are disclosed as Transfer Taxes on the Loan Estimate.Disclose only Transfer Taxes paid by the borrower on the Loan Estimate. Whether the borrower pays the transfer tax is based on applicable State or local law.
Example: If a State law indicates a lien can attach to the borrower's acquired property if the charge is not paid, the amount is included as part of Transfer Taxes;
If State or local law is unclear or does not specifically attribute the amount to the seller or borrower, disclose the amount apportioned to the borrower using common practice in the locality of the property.
However, transfer taxes to be paid by the seller are not disclosed on the Loan Estimate as Transfer Taxes.
The amount of Transfer Taxes disclosed could be modified to the extent the lender has knowledge of the apportionment of transfer taxes in the contract for sale between the borrower and a seller when it issues the Loan Estimate. When a lender does not have the contract of sale when it issues the Loan Estimate, the lender must use the apportionment of transfer taxes provided for by State or local law, or common practice when State or local law is unclear.
Disclose the sum of all transfer taxes paid by the borrower as Transfer Taxes. No additional items may be listed or deleted in the Taxes and Other Government Fees category.
prepaids
Prepaids are items to be paid by the borrower in advance of the first scheduled payment of the loan. Each item must include the applicable time covered by the amount to be paid by the borrower and the total amount to be paid. If no amount is charged for an item listed under Prepaids subheading, the amount on that line must be blank.
Itemized Prepaids
Homeowner's Insurance Premium (Number of months)
Mortgage Insurance Premiums (Number of months)
Prepaid Interest (Amount per day and the number of days)
Property Taxes (Number of months)
In the Prepaids Table, only three additional items may be listed.
Initial Escrow Payment at Closing
Initial Escrow Payment at Closing includes items that the borrower will be expected to place into a reserve or escrow account at consummation to be applied to recurring periodic payments. Also, disclose the amount escrowed per month for each item, the number of months collected at consummation and the total amount paid. If no amount is charged for an item listed under the Itemized Initial Escrow Payments at Closing subheading, the amount on that line must be blank.
Itemized Initial Escrow Payments at Closing
Homeowner's Insurance (Amount per month and the number of months)
Mortgage Insurance (Amount per month and the number of months)
Property Taxes (Amount per month and the number of months)
In the Initial Escrow Payment at Closing Table subheading, only five additional items may be listed.
other
Items include under the Other subheading include charges in connection with the transaction that the borrower is likely to pay or has contracted with a person other than the lender or loan originator to pay at closing and of which the lender is aware at the time of issuing the Loan Estimate. A maximum of five items can be disclosed under the Other subheading.
Examples of Separate Insurance, Warranty, Guarantee, or Event-Coverage Products
Owner's title insurance
Credit life insurance
Debt suspension coverage
Debt cancellation coverage
Warranties of home appliances and systems
Similar products.
total other cost
The Total Closing Costs is the sum of the Total Loan Costs (D), Total Other Costs (I), and any Lender Credits. Lender Credit is the amount of any payments from the lender to the borrower that does not pay for a particular fee on the Loan Estimate. Lender Credit is disclosed as a negative number.
For loans where all or a portion of closing costs are offset by a credit or rebate provided by the lender (sometimes referred to as "no cost" loans), disclose such credit or rebate as Lender Credits. The lender should ensure that Lender Credits is sufficient to cover the estimated items the lender represented to the borrower as not being paid by the borrower at consummation, regardless of whether such representations pertained to specific items.
Calculating Cash to Close
Under the heading Calculating Cash to Close, the total amount of cash or other funds that must be provided by the consumer at consummation is calculated.
(I) Calculating Cash to Close Table - All Transactions
There are eight items disclosed in the Estimated Cash to Close Table.
Eight Items in the Loan Estimate Calculating Cash to Close Table
(1) Total Closing Costs
(2) Closing Costs Financed (Paid from your Loan Amount)
(3) Down Payment/Funds from Borrower
(4) Deposit
(5) Funds for Borrower
(6) Seller Credits
(7) Adjustments and Other Credits
(8) Estimated Cash to Close
Total Closing Costs
Total Closing Costs is the same amount disclosed as Total Closing Costs in the Other Costs Table. The amount is disclosed as a positive number.he amount of any closing costs to be paid out of loan proceeds is calculated by subtracting the estimated total amount of payments to third parties not otherwise disclosed in the Loan Costs and Other Costs from the Loan Amount. The amount is disclosed as a negative number, (but only to the extent that it does not exceed the amount of Lender Credits).
Downpayment/Other Funds from Borrower
In a purchase transaction, the Downpayment/Other Funds from Borrower is the difference between the purchase price of the property and the principal amount of the loan, disclosed as a positive number. However, when the loan amount exceeds the purchase price of the property, disclose $0 as Down Payment/Other Funds from Borrower.
In all other transactions, subtract the principal amount of credit extended (excluding any amount disclosed as Closing Costs Financed (Paid from Your Loan Amount)) from the total amount of all existing debt being satisfied in the transaction.
When this calculation yields an amount that is positive, Down Payment/ Funds from Borrower is that amount.
If the calculation yields a result that is negative or $0, Down Payment/ Funds from Borrower is $0.
deposit
In a purchase transaction, Deposit is the amount, disclosed as a negative number that is paid to the seller or held in trust or escrow by an attorney or other party under the terms of the contract for sale of the property. In all other transactions, Deposit is $0.
Funds for Borrower
In a purchase transaction, Funds for Borrower is $0.
In all other transactions, subtract the principal amount of debt extended (excluding any amount disclosed as Closing Costs Financed from the total amount of all existing debt being satisfied in the transaction.
When this calculation yields an amount that is negative, then Funds for Borrower is that amount.
If the calculation yields an amount that is positive or $0, then Funds for Borrower is $0. (§ 1026.37(h)(1)(v))
Seller Credits
Seller Credits is the total amount that the seller will pay for items included in the Loan Costs and Other Costs tables, to the extent known. This is disclosed as a negative number.
Adjustments and Other Credits
djustments and Other Credits is the total amount of all items in the Loan Costs and Other Costs tables that are paid by persons other than the loan originator, lender, borrower, or seller, together with any other amounts that are required to be paid by the borrower at closing pursuant to the contract of sale (if any). This is disclosed as a negative number.Gifts from family members
Credits from a developer or home builder to be applied to items in the Loan
Costs and Other Costs Table
The Estimated Cash to Close
The Estimated Cash to Close is calculated as the sum of the seven other amounts disclosed in the Estimated Cash to Close Table.
Alternative Calculating Cash to Close Table
An optional Alternative Calculating Cash to Close Table can be disclosed for transactions without a seller. A lender that uses the optional Alternative Calculating Cash to Close Table must also use the alternative disclosure provisions of the Alternative Costs at Closing Table on Loan Estimate Page 1.
loan amount
The amount disclosed as Loan Amount is the same amount disclosed as Loan Amount on Loan Estimate Page 1.
Total Closing Costs
Total Closing Costs is the same amount as Total Closing Costs in the Other Costs Table, disclosed as a negative number.
Estimated Payoffs and Payments
Estimated Payoffs and Payments is the total amount to be paid to third parties not otherwise disclosed as items in the Loan Costs or Other Costs tables, disclosed as a negative number.Payoffs of existing liens secured by the property such as mortgages deeds of trust judgments that have attached to the property
Mechanics' and materialmans' liens
Local State and Federal tax liens
Payments of unsecured outstanding debts of the borrower
Payments to other third parties for outstanding debts of the borrower as required to be paid as a condition for the extension of credit.
Estimated Cash to Close
he amount for the Estimated Cash to Close is the sum total of the amounts disclosed as Loan Amount, Total Closing Costs, and Payoffs and Payments. Check boxes are used to disclose whether the Estimated Cash to Close is DUE FROM the borrower or will be PAID TO the borrower at consummation.
Estimated Closing Costs Financed
Estimated Closing Costs Financed is the sum of Loan Amount and Payoffs and Payments, but only to the extent, the amount is greater than zero and less than or equal to the sum of Total Closing Costs.
Examples:
If the Loan Amount is $100,000, the Payoffs and Payments is -$80,000, and the Total Closing Costs is $10,000; then the Closing Costs Financed would be $10,000.
If the Loan Amount is $100,000, the Payoff and Payments is -$95,000, and the Total Closing Costs is $10,000; then the Closing Costs Financed would be $5,000.
If the Loan Amount is $100,000, the Payoffs and Payments is -$110,000 and the Total Closing Costs is $10,000; then the Closing Costs Financed would be $0.
Adjustable Payment (AP) Table
The Adjustable Payment (AP) Table is used when the periodic principal and interest payment may change after consummation, but not because of a change to the interest rate, or that the loan is considered a Seasonal Payment product. If the loan does not contain these features, the AP Table is not used.
Interest Only Payments
Does the loan product have Interest Only Payments? Indicate an affirmative or negative answer to the question "Interest Only Payments?" If the answer is 'Yes', indicate the period during which the interest only payment would apply.
Optional Payments
Does the loan product have Optional Payments? Indicate an affirmative or negative answer to whether the consumer may elect to pay a specified periodic principal and interest payment in an amount other than the scheduled amount of the payment. If the answer is 'Yes', indicate the period during which the consumer may elect to make such payments.
Step Payments
Does the loan product have Step Payments? Indicate an affirmative or negative answer to the question "Step Payments?" If the answer is 'Yes', indicate the period during which the regular periodic payments are scheduled to increase.
Seasonal Payment Product
Is the loan a Seasonal Payment Product? Indicate an affirmative or negative answer to the question "Seasonal Payments?" If the answer is 'Yes', indicate the period during which periodic payments are not scheduled.
First Change/Amount
The subheading, Monthly Principal and Interest Payments, discloses the first change and amount, any subsequent changes, and the maximum payment.
The First Change/Amount discloses the number of the payment that may change, counting from the first periodic payment due after consummation, and the amount or range of the periodic principal and interest payment for such payment.
Subsequent Changes
The frequency of Subsequent Changes to the periodic payment.
Maximum Payment
The Maximum Payment that may be paid during the term of the loan with the number of the first periodic principal and interest payment that can reach such Maximum Payment amount.
If the exact payment number of the first payment adjustment is not known at the time of the Loan Estimate, the earliest possible payment that may change must be disclosed.
Monthly Principal and Interest Payments
The label "Monthly Principal and Interest Payments" can be changed to reflect a payment schedule that is not monthly, such as Biweekly or Annual.
Disclose any scheduled periodic payment that only covers some or all of the interest that is due and not any principal as Monthly Principal and Interest Payments, even though the AP Table refers to Monthly Principal and Interest Payments.
Adjustable Interest Rate (AIR) Table
The Adjustable Interest Rate (AIR) Table is used when the loan's interest rate may increase after consummation. If the loan's interest rate will not increase after consummation, the AIR Table is not used.
Index and Margin
The name of the index upon which adjustments to the interest rate will be based and the margin that is added to the index to determine the interest rate is disclosed in the provided column. The index must be described so that a borrower can reasonably identify it and the margin should be disclosed as a percentage.
Example: LIBOR may be used instead of the London Interbank Offered Rate. If the interest rate is calculated by adding 4.25 to LIBOR, the margin should be disclosed as 4.25%.
Increases in Interest Rate
If the product type is a Step Rate loan, but NOT also an Adjustable Rate loan, indicate the maximum amount of any adjustments to the interest rate that are scheduled and pre-determined. These disclosures are labeled "Interest Rate Adjustments".
Initial Interest Rate
The Initial Interest Rate is the interest rate at consummation of the loan transaction. This interest rate must be disclosed even if it is for a brief period, such as one month.
Minimum and Maximum Interest Rates
The Minimum and Maximum Interest Rates for the loan, after any introductory period expires, are disclosed here.
The minimum interest rate that applies to the loan under applicable law must be disclosed if the loan does not provide for a minimum interest rate. However, if applicable law does not set a minimum interest rate, disclose the amount of the margin as the minimum interest rate.
The maximum interest rate that applies to the loan under applicable law, such as State usury law, must be disclosed if the loan does not provide for a maximum interest rate.
First Change
For the First Change, list the month when the first interest rate change may occur after consummation.
Subsequent Changes
For Subsequent Changes, indicate the frequency of interest rate adjustments after the initial adjustment
Typically, the first change month for the interest rate is scheduled in the terms of the loan. However, if the exact month is not known at the time the lender provides the Loan Estimate, the earliest possible month for the first change to the interest rate of the loan must be disclosed based on the best information available to the lender at the time the Loan Estimate is disclosed.
Limits on the Interest Rate Changes
Any Limits on the Interest Rate Changes are disclosed here.
First Change
First Change. For the First Change, indicate the maximum possible change for the first adjustment of the interest rate after consummation.
Subsequent Changes
For Subsequent Changes, indicate the maximum possible change for subsequent adjustments of the interest rate.
The greatest limit on changes in the interest rate must be disclosed when more than one limit applies to changes in the interest rate.
Example: If the initial interest rate adjustment is capped at 2%, the second adjustment is capped at 2.5%, and all subsequent adjustments are capped at 3%, 3% is disclosed as Subsequent Changes.
Additional Information About This Loan
Page 3 of the Loan Estimate is called, Additional Information About This Loan, and discloses contact information, includes a Comparisons Table and an Other Considerations Table; and, if desired, a place for the borrower to sign to acknowledge receipt of the Loan Estimate. [12 CFR §1026.37(k)(l)(m)(n)].
Contact Information
The Contact Information section has space to disclose the Name and NMLS/License ID number for the lender and mortgage broker, if any, and the individual loan officer of both. Also, include the email and/or phone number of the individual loan officer. The person identified as the individual loan officer must be the primary contact for the borrower.
Comparisons Table
The Comparisons Table discloses information related to the costs of the loan In Five Years, the Annual Percentage Rate (APR), and the Total Interest Percentage (TIP).
In 5 Years
The total amount the borrower will have paid in principal, interest, mortgage insurance, and loan costs paid through the end of the 60th month after the due date of the first periodic payment. The following statement must be included, "Total you will have paid in principal, interest, mortgage insurance, and loan costs."
The amount of principal paid through the end of the 60th month after the due date of the first periodic payment. The following statement must be included, "Principal you will have paid off."
Annual Percentage Rate (APR)
Disclose the Annual Percentage Rate (APR), together with a brief descriptive statement, in the Comparisons Table on Page 3. The following statement must be included: "Your costs over the loan term expressed as a rate. This is not your interest rate."
Total Interest Percentage (TIP)
The Total Interest Percentage (TIP) is the total amount of interest that the borrower will pay over the loan term, expressed as a percentage of the loan amount.
For example, if the Loan Amount is $100,000 and the total amount of interest that the borrower will pay over the Loan Term is $50,000, then the TIP is 50%.
Disclose the Total Interest Percentage, the abbreviation TIP, and the following statement, "The total amount of interest that you will pay over the loan term as a percentage of your loan amount."
Other Considerations
Other Considerations that concern the loan transaction include (1) Appraisal, (2) Assumption, (3) Homeowner's Insurance, (4) Late Payment, (5) Refinance, and (6) Servicing.
Appraisal
The Appraisal disclosure states that the lender may require an appraisal of the property as a condition of approving a loan. The borrower may be charged for the appraisal and the lender will give the borrower a copy of the appraisal, even in the transaction is not consummated.
In addition, a statement concerning the appraisal must be provided for higher-priced mortgage loans and loans covered by the Equal Credit Opportunity Act. If the loan is a higher-priced mortgage loan, but is not covered by the Equal Credit Opportunity Act, the word "promptly" may be removed from the language provided on the model form.
Assumption
The lender must disclose whether an Assumption of the loan is possible and that a subsequent purchaser of the property may be allowed to assume the loan on its original terms if the property is sold or transferred by the borrower.
At the time the loan is made, often the lender cannot determine whether a loan may be assumable at a future date on its original terms. Therefore, the lender can only disclose that it MAY be assumable.
Homeowner's Insurance
The lender may require Homeowner's Insurance (hazard insurance) as a condition of making the loan on the property. The borrower may choose the provider.
Late Payment
The lender must disclose when a Late Payment can be charged and how much it can be stated as a dollar amount or as a percentage.
Items not included as late payment charges include the right of acceleration, fees imposed for actual collection costs, referral and extension charges, and interest charged at the contract rate after the payment due date.
Refinance
The lender must include the following statement regarding Refinance.
"Refinancing this loan will depend on your future financial situation, the property value, and market conditions. You may not be able to refinance this loan."
For refinance transactions, the lender must include a statement relating to state law that protections against liability for any deficiency after foreclosure may be lost. Therefore, the borrower may want to consult an attorney for additional information.
Servicing
The lender needs to include a statement of whether the lender intends to service the loan or transfer the loan to another servicer.
Confirm Receipt
The borrower is not required to sign the Loan Estimate. The lender may add a signature statement and have the borrower sign Page 3 of the Loan Estimate in order to Confirm Receipt of the Loan Estimate by the borrower. If used by the lender, the signature statement must contain the exact language from the model form.
"You do not have to accept this loan because you have received this form or signed a loan application."
If the Confirm Receipt Table is not used by a lender, the statement about loan acceptance must be included at the end of the Other Consideration Table.
Loan Estimate
The Loan Estimate is designed to provide information to help borrowers understand the key features, costs, and risks of the mortgage loan for which they are applying. The Loan Estimate must be provided to borrowers no later than 3 business days after they submit a loan application. The Loan Estimate must be used for most closed-end mortgages. Home equity lines of credit, reverse mortgages, or mortgages secured by a mobile home or by a dwelling that is not attached to real property (i.e., land) must continue to use current disclosure forms required by TILA and RESPA separately.
When a lender or mortgage loan originator receives a loan application, the borrower must receive a Loan Estimate no later than 3 business days of the receipt of the application.
There are six items required for an application to be considered received: borrower's name, borrower's income, borrower's social security number to obtain a credit report, address of the property, estimate of the value of the property, and the mortgage loan amount sought.
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