Posted by Eileen McRorey on 10/9/11 1:16am
Msg #399984

Truth in lending

Does anyone have an easy to understand explanation of the truth in lending page? I always have a hard time when the borrower asks why the apr is more than the int rate in the note. I have a printed sheet with an explanation, but it is not easy to understand either. If I have them ask the loan officer, they are still confused.

Reply by Buddy Young on 10/9/11 1:35am
Msg #399985

Eileen,
The anual percentage rate ( apr) is usually higher than the stated interest rate because the apr includes the interest rate plus discount points and other finance charges such as application and inspection fees, closing fees, loan discount fees, prepaid interest and mortgage insurance premiums.

Reply by JanetK_CA on 10/9/11 2:22am
Msg #399988

This has been discussed here before at some length. Try searching for APR.

Reply by Patricia Koch on 10/9/11 4:37pm
Msg #400023

my explanation: If you have a rate of 5 % and the apr is 5.25 and another rate of
5% and the apr is 5.50 ---- this tells me that the second rate has higher fees and costs
as compared to the first rate. They seem to understand

Reply by Linda_H/FL on 10/9/11 4:47pm
Msg #400025

APR is the costs of the loan translated to a percentage.

Easy, simple, not too involved...

Reply by Bob_Chicago on 10/9/11 5:49pm
Msg #400026

One particular lender has a sheet in their package with

an excellent explanation. Don't want to mention the name, but think of what
a dog does with a cat, or a car for that matter.

Reply by Eileen McRorey on 10/10/11 2:32am
Msg #400037

Re: One particular lender has a sheet in their package with

Thanks for the help. I did use the search button but was unable to find what I needed using apr and/or til. Being able to explain in a simpler language really helps.

Reply by CopperheadVA on 10/10/11 6:46am
Msg #400040

I found this a few years ago, and the explanation provided helped me to come up with my own brief statement to tell borrowers about the APR. It's from the Indiana Department of Financial Institutions, Consumer Credit Division. There is a link at the bottom of the page for a printable brochure:

http://www.in.gov/dfi/2582.htm