What are Prepaid Finance Charges (as listed on lenders Truth-In-Lending disclosure)?
Prepaid Finance Charges are certain charges made in connection with the loan and which must be paid upon the close of the loan. These charges are defined by the Federal Reserve Board in Regulation Z and the charges must be paid by the borrower. Non-Inclusive examples of such charges are: Loan origination fees, Points or Discount fees, Private Mortgage Insurance or FHA Mortgage Insurance, Tax Service fee. Some loan charges are specifically excluded from the Prepaid Finance Charges such as appraisal fees and credit report fees. Prepaid Finance Charges are totaled and then subtracted from the Loan Amount (the face amount of the Deed of Trust/Mortgage Note). The net figure is the Amount Financed.
