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The Truth In Lending Act and Your Mortgage Loan Application

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By : Roby Hicks    99 or more times read
Everyone who has applied for a mortgage loan after 1968 has most likely take advantage of the Truth in Lending Act or TILA. This is a federal law enacted during the above-mentioned year with the primary purpose of protecting consumers through the right information. But how does this work and how can it help and protect the consumers, you might ask.

How does TILA works?

The TILA mandates that lenders follow a standard form of presenting information to their borrowers. Such uniformity will prevent confusion and will make it easier for the borrowers to compare and choose the most suitable lender for them. Among the essential information that has to be presented by the lenders are the total cost of the mortgage, the fees and the charges included in the mortgage, the total amount lent, the information of the lender and the annual percentage rate or the APR.

In addition to the said information, the data presented by the lender should also explain the mortgage terms carefully. If the borrower opts for the adjustable rate mortgage, the lender should present all the essential information about it. This is necessary to help the borrower decide whether the said mortgage term works for her or not.

The TILA is not limited to mortgage loans. This is applicable to almost everyone who will be using his or her credit. However, it has certain limitations too. The point of TILA is that knowing the essential information will prevent one from being a victim of fraud. Most reputable companies are doing honest business. However, not all lenders are doing the same. Most fly by night lenders are out to take advantage of the ignorance and the confusion of some borrowers. This can be stopped by the TILA because there is now a uniform way of presenting information. The terms used are almost similar and easier to understand.

How does TILA protect the consumers?

Any violators of the TILA will be held liable. A borrower may file a lawsuit once he discovered the violation within a year after the violation is committed. The lender can correct it within 60 days after the error is discovered.

The lender will also be held liable if the information he has provided is misleading, which has affected the decision of the borrower towards the product or the services offered by the other party. If the injury is significant and the benefits do not outweigh them, the guilty party will be duly sanctioned. This is why you should know your rights as a consumer. Learn as much as you can before you decide who your lender will be.

Buying a house is a major purchase. This is why buyers need to gather as much information as they can before they choose a lender. Choosing the lender with the most suitable mortgage term will definitely make it easier for borrowers to make their payments. The TILA makes choosing the right lender easier, as they are required to present essential information in a uniform manner. This makes comparison easier. Thus, making the choosing easier too.
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