What is the finance charge on a mortgage?
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A finance charge is the total amount of interest and loan charges you would pay over the entire life of the mortgage loan.
This assumes that you keep the loan through the full term until it matures (when the last payment needs to be paid) and includes all pre-paid loan charges.
Loan charges include:
- Origination charges
- Discount points
- Mortgage insurance
- Other applicable lender charges
You can find your finance charge on page 5 of the Closing Disclosure form in the “Loan Calculations” section.
Note: You will not receive a Loan Estimate or Closing Disclosure if you are shopping for:
- A reverse mortgage
- A home equity line of credit (HELOC)
- A manufactured housing or mobile home loan not secured by real estate
- A subordinate loan through certain types of homebuyer assistance programs
For these kinds of loans, you should receive Truth-in-Lending disclosures. If you are shopping for a reverse mortgage, you will also receive a Good Faith Estimate (GFE) and a HUD-1 or HUD-1A Settlement Statement.