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.
You won’t receive a Closing Disclosure if you applied for a mortgage prior to Oct. 3, 2015, or if you're applying for a reverse mortgage. For those loans, you will receive two forms –a HUD-1 Settlement Statement and a final Truth in Lending Disclosure – instead of the Closing Disclosure. If you are applying for a HELOC, a manufactured housing loan that is not secured by real estate, or a loan through certain types of homebuyer assistance programs, you will not receive a HUD-1 or a Closing Disclosure, but you should receive a Truth-in-Lending disclosure.