Finance
Under the federal Truth-in-Lending Act (TILA/Regulation Z), which document must a Massachusetts borrower receive showing the Annual Percentage Rate?
AThe Closing Disclosure
BThe Loan Estimate✓ Correct
CThe Good Faith Estimate
DThe HUD-1 Settlement Statement
Explanation
The Loan Estimate, required by TILA/RESPA, must be provided to borrowers within 3 business days of application and discloses the APR, estimated monthly payment, and closing costs.
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Key Terms to Know
Closing Costs
Fees and expenses paid by the buyer and/or seller at the closing of a real estate transaction, in addition to the property's purchase price.
Loan-to-Value Ratio (LTV)The ratio of a mortgage loan amount to the appraised value or purchase price of a property, expressed as a percentage.
Debt-to-Income Ratio (DTI)A lender's measure of a borrower's monthly debt obligations relative to their gross monthly income, used to evaluate loan eligibility.
Discount PointsPrepaid interest paid to a lender at closing to reduce the mortgage interest rate, with each point equal to 1% of the loan amount.
Math Concepts
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