What is a TIL and prelim?


What is a TIL

It is not easy to explain but let’s give it a try…

The TIL is used to help customers understand the federal disclosures that are required to be sent to all borrowers. The Truth In Lending (TIL) disclosure is one of the most commonly misunderstood documents in the mortgage process. The TIL is designed to help borrowers understand that their borrowing cost consists of more than simply the interest rate on the new mortgage. The TIL expresses the cost of the new loan in the form of an Annual percentage rate (APR) which essentially says “If all your mortgage related closing costs were lumped into the interest rate rather than being paid separately, what would the interest rate have to increase by to incorporate these costs”.

The APR is not the same as your interest rate. Because the APR includes items in addition to interest, it is higher than the note rate. It is a combination of the amount of interest to be paid over the life of the loan, together with the prepaid finance charges computed as an annual rate.

TIL = Truth In Lending

A prelim can mean several things depending upon context…how was it used?


In the context of having an appraisal done.

Normally, a prelininary appraisal is somewhat skeletal and based on fewer firm factors…it will give you an approximate to start working with until a certified appraiser does a ‘real’ appraisal.