A mortgage lender is required to make certain disclosures to a borrower at application or within 3 days after application. The disclosures describe costs incurred with the loan, the effective interest rate being charged, as well as the possibility that the lender will transfer the servicing rights to your loan.

• Good Faith Estimate:  The Real Estate Settlement Procedures Act (RESPA) requires the disclosure of estimated settlement costs to homebuyers based on the parameters of their loan. These costs should reflect the costs to he paid at closing and itemized on the HUD Settlement Statement, and may vary based on changes in the loan between the time of application and closing. In addition, the lender is required to provide the borrower with the Buying Your Home Settlement Costs and Helpful Information Booklet describing the homebuying process.
  
  

• Truth-in-Lending: The purpose of the Truth-in-Lending Law and regulations is to ensure that borrowers are made aware of the true terms and costs of credit transactions so that they can more knowledgeably compare the offerings of different lenders. Following are definitions of some items on the Truth.-in-Lending form.
  
  

• Annual Percentage Rate (APR): May or may not be the same as the note rate being charged on the loan, based on whether any Prepaid Finance charges are incurred. The APR is defined as the cost of credit to the borrower expressed as a yearly rate.
  
  

• Finance Charge: Includes any charge payable directly or indirectly by the borrower and imposed directly or indirectly by the lender as a condition of the extension of credit. It consists of various fees that are prep aid at settlement or before hand, or that are paid after settlement. The mortgage interest portion of the monthly payment is the major portion of the post settlement finance charge. Examples of prepaid finance charges are interest adjustments, origination fee, discount fees, and mortgage insurance premiums.
  
  

• Amount Financed: May or may not be the amount of the loan, based on whether any Prepaid Finance Charges are incurred. The amount financed will usually equal the net amount of cash that is disbursed by the lender at closing after prepaid finance charges have been subtracted.
  
  

• Transfer for Servicing: This document represents the lender's intent regarding the servicing of your loan after closing, and tells what percentage of loans on which they have transferred servicing in the past.
  
  

• Verification Documents: For the lender to make the loan they must verify items on the application such as deposits, rent, liabilities, employment, securities, etc. You will need to sign copies of these verifications or a Blanket Authorization Form.