Truth in Lending Act: Protecting the Buyer and Seller
Gabriel TraversoLoanBiz Columnist
Mortgage closing costs are regulated by the Truth in
Lending Act. What does this mean for the home buyer and seller? How does it
protect you?
Closing costs are all the fees, for either the home buyer or
seller that is above and beyond the actual price of the home. They can include,
but are not limited to:
- Appraisal Fees
- Attorney Fees
- Title Service Costs
- Brokerage Commission
- Mortgage
Application Fees
The Truth in Lending Act requires that all closing costs are
itemized prior to the closing of the home. This means that both the buyer and
the seller will know exactly how much they will need for closing and where the
money is going.
The Truth in Lending Act was created in 1968 to regulate the
clear disclosure of the terms of any lending arrangements. This means that all
points of a home loan need to be detailed prior to a home closing. This
protects you when buying a new home from the danger of hidden fees, costs, or
unclear interest rates. Regulation Z of
the Truth in Lending Act also includes a provision for full disclosure of the
terms of adjustable rate mortgages. This helps new home buyers understand the
minimum and maximum interest rates that can be expected with their adjustable
rate mortgage. It also gives the buyer another opportunity to back out if the mortgage
doesn't fit their needs.
There are plenty of ways to ensure you are getting the best
deal on closing costs possible as you shop for your mortgage, but the best is
to ask for a Good Faith Assessment from each mortgage lender. These act as
estimates of your projected closing costs. By doing you research, and
understanding your rights as identified by the Truth in Lending Act, you can
ensure your mortgage is the best for you.
About the Author
Gabriel Traverso is a freelance writer, professional musician, and artist. He resides with his family in Reno, NV.
