GFE Loan Amount v. TiL Amount Financed (PMI, payment schedule, escrow)
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HI,
I am reviewing my Good Faith Estimate & Federal Truth In Lending Disclosure for a new mortgage loan, and was wondering if anyone could explain this.
My loan amount is $559,900 on the Good Faith Estimate, however, the "Amount Financed" , as shown on the Truth In Lending Disclosure is $556,746.That's a $3,154 difference.
Under "Amount Financed", there is a description that reads:
"The amount of credit provided to you or on your behalf as of loan closing."
So, my question is, if I am borrowing $559,900 and only being credited $556,746, what happens to the other $3,154 that I am borrowing, and why am I not being credited for it? Is this normal, or a hidden fee of some sort?
HI,
I am reviewing my Good Faith Estimate & Federal Truth In Lending Disclosure for a new mortgage loan, and was wondering if anyone could explain this.
My loan amount is $559,900 on the Good Faith Estimate, however, the "Amount Financed" , as shown on the Truth In Lending Disclosure is $556,746.That's a $3,154 difference.
Under "Amount Financed", there is a description that reads:
"The amount of credit provided to you or on your behalf as of loan closing."
So, my question is, if I am borrowing $559,900 and only being credited $556,746, what happens to the other $3,154 that I am borrowing, and why am I not being credited for it? Is this normal, or a hidden fee of some sort?
On the GFE, I see that the prepaid interest due at closing, plus the Bank's Attorney's fee, adds up to $3154.
I'm guessing the bank deducts this payment from the proposed loan amount and makes the new loan amount $556,746?
Yep. On the TIL they will take your loan amount ($559,000) and deduct from it all pre-paid finance charges (marked PFC or APR items on some GFE) to get the amount financed.
PFC are the charges the bank calculates as "costs that come with the loan" and are included in the APR. This typically includes origination fees, points, underwriting, application, other lender fees and the pre-paid interim interest until the end of the month. Sometime's the attorney's fee is included, it should be if the bank is requiring the use of a specific one.
If you look at the next box, the "finance charge", those fees ($3154) are added to the total along with the interest you will pay over the life of the loan and any PMI charges. You add the finance charge to the amount financed to get the total payments if you pay the minimum amount every month.
If you pay more than the minimum monthly payment, the finance charge and payment decrease as the interest you pay over the life of the loan decrease. This will also change your effective APR over the life of the loan, so those figures are only valid for someone sticking to the payment schedule listed on the TIL.
Yep. On the TIL they will take your loan amount ($559,000) and deduct from it all pre-paid finance charges (marked PFC or APR items on some GFE) to get the amount financed.
PFC are the charges the bank calculates as "costs that come with the loan" and are included in the APR. This typically includes origination fees, points, underwriting, application, other lender fees and the pre-paid interim interest until the end of the month. Sometime's the attorney's fee is included, it should be if the bank is requiring the use of a specific one.
If you look at the next box, the "finance charge", those fees ($3154) are added to the total along with the interest you will pay over the life of the loan and any PMI charges. You add the finance charge to the amount financed to get the total payments if you pay the minimum amount every month.
If you pay more than the minimum monthly payment, the finance charge and payment decrease as the interest you pay over the life of the loan decrease. This will also change your effective APR over the life of the loan, so those figures are only valid for someone sticking to the payment schedule listed on the TIL.
Great explanation! Thank you so much for your help.
With the new HERA becoming effective soon, I am concerned that I may not have everything I should marked as a PFC. Is there an expert here that can list all items that should be marked as a PFC?
The Truth in lending (TIL) ADDENDUM shows the loan amount and then backs out the fees that result in the "Amount Financed".
For the borrower I am looking at currently, here are the items that are deducted:
1. Start with loan amount
2. Deduct: Origination Charge, Points charged, prepaid interest, Tax Service Fee, Flood Cert, Closing Costs / Escrow, Escrow / Loan tie in fee and Courier / 3rd Party fees.
3. The result is the AMOUNT FINANCED
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