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Transfer Tax Calculator 2023

What you should know.

  • Transfer tax is levied on all real estate transactions in a specified area.
  • Transfer tax can be imposed by a state, a county, and a municipality that add up to a combined tax for the area in their jurisdiction.
  • Combined transfer tax can vary greatly between different cities, counties, and states, so it is important to ensure that the tax rates are correct for the location of interest.
  • This transfer tax calculator enables you to estimate the transfer tax rates for all 50 US states for the year 2023.

What Is Transfer Tax?

Many states and municipalities levy a tax on all real estate transactions happening in their jurisdiction. A transfer tax, also known as a conveyance tax, is a government charge issued when a property owner transfers ownership or title to the property to another person or entity. This tax can be charged at the state, county, and municipal levels. It is often included as part of the seller’s closing costs , but it can be paid by the buyer too. Use our real estate transfer tax calculator to find out how much your real estate transfer tax would cost.

Transfer Tax Rates By State

Transfer tax calculation.

In most cases, your transfer tax will be a combination of a state transfer tax, a county transfer tax, and possibly a municipality transfer tax. Most states charge a flat transfer tax throughout all counties although some counties may choose a unique transfer tax rate. In addition to that, some municipalities may charge a unique transfer tax too. When purchasing or selling property, you should check your county and municipality’s specific transfer tax rate or ask your real estate agent about the combined transfer tax rate.

Once you know your transfer tax rate, you should estimate your transfer tax liability. To estimate how much you owe in transfer tax, you simply need to multiply your transfer tax rate by your combined transfer tax. Some tax rates may differ based on your location and the home price. You should estimate transfer tax with your real estate agent to ensure the right result. You can also use our transfer tax calculator to estimate your tax liability.

Are Transfer Taxes Deductible?

According to the IRS , you cannot deduct transfer tax from your income when filing taxes. However, you can receive future tax benefits when paying transfer taxes as a home buyer.

Home Buyers: If you buy a home and then pay a transfer tax, you can add this tax to the home’s purchase price. In the future, you may sell your home and earn a profit based on the home's increases in value. In this case, you would sell the home for more than the original purchase price and this profit would be considered capital gains. If you add transfer taxes to the initial purchase price, your capital gains will be reduced.

Home Sellers: If you sell a home and pay transfer taxes, you can deduct this tax from the home's sale price. If you bought the home for less than the sale price, then the difference is considered capital gains and is taxed. By deducting any transfer taxes, the taxable amount of capital gains will be reduced.

Transfer Tax Exemptions

There are different types of transfer tax exemptions. You can be exempt from a transfer tax by falling into predefined categories listed by your state or county. States can also exempt first-time home buyers or specific home buyers from paying the transfer tax.

States exempt real estate transfers from paying documentary transfer taxes under certain circumstances. If an exemption occurs and only the seller is exempt from paying transfer tax, the buyer will still have to pay a transfer tax. Likewise, if only the buyer is exempt, the seller must pay a transfer tax.

Real Estate Transfer Tax by State

States with no transfer tax.

The real estate transfer tax varies quite a bit by state and even between counties. Different counties can charge additional taxes and have unique rules. Below is a detailed breakdown of the transfer tax rules for the most popular states.

In California, the transfer tax is typically paid by the seller as stated in most purchase agreements , but this is negotiable. If the seller is exempted from paying the transfer tax, then the buyer will have to pay it. If both the buyer and the seller do not pay the transfer tax, the responsibility to pay it will default to the seller, so it is important to ensure that your purchase agreement outlines who will pay for it.

All counties in California charge the same state transfer tax rate of 0.11%, but each city may charge an additional transfer tax rate on top of this amount. Some cities may also have a transfer tax rate that is based on the value of the property being transferred, such as San Francisco, Santa Monica, and Santa Clara.

For example, San Francisco's transfer tax rate for properties valued $10 million but less than $25 million is 5.50%, while the transfer tax rate for properties valued $25 million or more is 6.00%. This means that a property valued at $24,999,999 would have a transfer tax rate of 5.50%, for a total transfer tax of $1,375,000. Meanwhile, a $25,000,000 property would have a transfer tax rate of 6.00% for a total transfer tax of $1,500,000. Just a $1 difference in property value can put your transfer tax into the next tax bracket, adding an additional $125,000 in tax.

The table below shows the 26 cities in California that charge an additional city transfer tax in addition to the standard 0.11% California county transfer tax.

The New Jersey (NJ) Transfer Tax does not vary by county. Instead, the marginal transfer tax rate is larger with a higher-valued home.

Each marginal tax rate only applies to the amount of your home price within each bracket. This means that your total tax rate is a combined tax rate between all the transfer tax rates applicable to you.

NJ Transfer Tax for Homes Valued at $350,000 or Less

Nj transfer tax for homes valued at more than $350,000.

Our calculator can be used to calculate transfer tax in New Jersey. You should simply go to the calculator above, choose the state of New Jersey and fill out the required information to estimate your transfer tax for the year 2023.

Transfer taxes in New Jersey are paid by the seller. Partial exemptions from New Jersey's transfer tax are available. To qualify for the partial exemption, you will need to be either a senior citizen or a blind/disabled person. New Jersey defines a senior citizen as being 62 years of age or older. The property must also be affordable housing for a low or moderate income household. You will need to provide a notarized affidavit in order to qualify. The table below shows the reduced New Jersey transfer tax rates for those that qualify for the partial exemption.

NJ Real Estate Transfer Tax Exemptions

Generally, the seller will pay for the transfer tax in New York, but if the seller is exempt, then the responsibility to pay this tax falls upon the buyer. Buyers are responsible for paying New York’s mortgage recording tax as part of their buyer closing costs . The following table summarizes the tax rate levied by the New York State government. It is important to note that local governments usually levy their transfer tax on top of the state tax.

New York State Transfer Tax Rates

Properties within the Metropolitan Commuter Transportation District (MCTD) will also pay an additional transfer tax of 0.3%. Properties in counties outside of the MCTD will pay an additional transfer tax of 0.25%. The MCTD includes Rockland, Nassau, Suffolk, Orange, Putnam, Dutchess, Westchester, and the counties of New York City (the boroughs of the Bronx, Brooklyn, Manhattan, Queens, and Staten Island).

In New York City (NYC), the transfer tax is the state transfer tax plus the county transfer tax. If the home value is $500,000 or less, the county transfer tax is 1% and if the home value is more than $500,000 the transfer tax is 1.425%. These are not marginal tax rates, so your respective tax rate is applicable to full home value. New York City also charges an additional transfer tax of 0.25% for homes over $3 million. A further supplemental transfer tax is also charged by New York City from 0.25% for homes from $2 million to $3 million to as high as a tax rate of 2.9% for homes over $25 million.

New York City Supplemental Transfer Taxes

New York State also charges a mortgage recording tax of 1.25% in most counties, and 1.30% in the MCTD (including New York City). Unlike the NY transfer tax which is paid by the seller, the mortgage recording tax is paid by the buyer. New York City also charges a mortgage recording tax of 0.5% if the mortgage amount is less than $500,000 and a tax of 1.125% if the mortgage amount is over $500,000. It is important to note that it is possible to avoid recording tax in the state of New York by using CEMA loans. CEMA loans allow the borrowers to bypass recording tax at the time of refinancing and pay the tax only on the difference between the old mortgage balance and the new mortgage balance.

Additional Transfer Taxes in New York

This means that if you purchase a $4 million home in New York City with a $3 million mortgage, your transfer taxes would be:

  • New York State Transfer Tax (1.4%) = $56,000
  • New York State Additional Tax within MCTD (0.3%) = $12,000
  • New York City Transfer Tax (1.425%) = $57,000
  • New York City Additional Tax (0.25%) = $10,000
  • New York City Supplemental Tax (0.50%) = $20,000
  • New York State Mortgage Recording Tax (1.3%) = $39,000
  • New York City Mortgage Recording Tax (0.5%) = $15,000

The total transfer tax paid by the seller would be $155,000, and the total mortgage recording tax paid by the buyer would be $54,000.

Florida Transfer Tax Rates

In Florida, the transfer tax is used for Documentary Stamps (Doc Stamps) on a deed, and it typically is paid by the seller because they are responsible for these Doc Stamps. While this is common, the buyer and the seller can negotiate who pays for these stamps and outline it in the purchase agreement. There are a number of exemptions to the transfer tax, which include the deed being changed or an owner being added to the deed.

In Florida, there are two distinct transfer tax rates:

  • Miami-Dade County: If the property is within Miami-Dade county, the transfer tax is 0.6% of the sale price.
  • Outside Miami-Dade County: Anywhere outside Miami-Dade county has a transfer tax of 0.7% of the sale price.

Miami-Dade County’s transfer tax rate depends on the property type. Single-family homes in Miami will have a transfer tax rate of 0.60%. All other property types, such as townhouses and condos, will have an additional surtax that increases the transfer tax rate to 1.05%.

Florida also charges a transfer tax of 0.55% based on the mortgage amount balance. For example, if you borrowed $100,000 to purchase your property, your mortgage transfer tax would be $550. This is separate from the Florida transfer tax paid on the property’s sale price.

The Colorado Taxpayer's Bill of Rights (TABOR) was passed in 1992 and amended the Colorado Constitution to prevent any new transfer taxes or transfer tax increases in the state. However, cities and towns in Colorado that had an existing transfer tax before 1992 are allowed to remain. In addition, a statewide documentary “fee” of 0.02% applies to all transfer of property in Colorado. Since it is described as a “fee” rather than a transfer “tax”, it was allowed to be increased to the current 0.02% rate in 2018.

The City of Aspen charges two types of transfer taxes: a Housing Real Estate Transfer Tax (HRETT) and a Wheeler Opera House Real Estate Transfer Tax (WRETT). The Aspen HRETT is 0% for the first $100,000, and 1.0% amounts over $100,000. The Wheeler Opera House Real Estate Transfer Tax is used to fund the City of Aspen's Wheeler Opera House. The WRETT rate is 0.5% and is set to expire in December 2039.

The table below shows the cities and towns that have an additional grandfathered transfer tax in Colorado on top of the statewide transfer “fee” of 0.02%.

In Pennsylvania, the transfer tax is split between the seller and the buyer and both of them are held accountable for its payment. This means that the transfer tax is often split evenly between them, but this is negotiable and will change according to the real estate market.

The transfer tax payment in Pennsylvania is split between the state, local municipality, and school district. At the state level, the transfer tax is 1% of the sale price. However, at the county level, the transfer tax will vary.

Names with bullet points are cities, municipalities, townships, etc. in the county above it.

The total transfer tax rate in Pittsburgh is 5%, while the transfer tax rate in Philadelphia is 4.278%. Philadelphia also charges a deed recording fee of $256.75. This includes a $107 recording fee, $107 Philadelphia Housing Trust Fund fee, $0.50 State Writ Tax, $2 County fee, and $40.25 Access to Justice fee. The last time Philadelphia's transfer tax rate was changed was in 2018, when the city portion increased from 3.10% to the current 3.278% rate. Philadelphia's real estate transfer tax is set to decrease to 3.178% on January 1, 2037.

Connecticut has a conveyance tax rate that depends on the property type and the sales price of the property. The state transfer tax rate for properties $800,000 or less is 0.75%. For portions of a property's sale price from $800,000 to $2.5 million, the state tax rate is 1.25%, while portions of the sale price over $2.5 million is taxed at a rate of 2.25%.

Connecticut Transfer Tax Rates

According to Connecticut state law , the assessed value of real estate property must be 70% of its fair market value. This means that only 70% of a property’s fair market value is taxed. Residents of Connecticut can also use their transfer tax to reduce their income or property tax if they paid any transfer tax at the 2.25%. This means that residents that paid transfer tax on a home valued over $2.5 million are eligible for tax credits. The full amount of the transfer tax paid at the 2.25% can be claimed against their state income tax due. Up to 33.3% of the transfer tax paid at the 2.25% rate can also be used as a credit towards Connecticut property taxes each year, and unused amounts can be rolled over for up to six years.

For example, a $3,000,000 property would have an annual property tax of $48,900 in Connecticut. Upon transfer of the property, $500,000 would be taxed at the 2.25% transfer tax rate, or $12,500. This means that up to $4,166 can be claimed each year towards property tax. This reduces the property’s annual property tax bill from $48,900 to $44,734 for three years.

Connecticut also charges a "controlling interest transfer tax" which is used when real estate is transferred through a business entity being sold or the controlling interest being transferred. Conneticut's controlling interest transfer tax rate is 1.11%.

Municipalities in Connecticut also charge a municipal conveyance tax, with some cities and towns allowed to charge a higher transfer tax than others. There are 19 municipalities in Connecticut that are allowed to charge a municipal transfer tax rate higher than 0.25%, and they are able to do so due to a manufacturing plant that is located within that municipality. These eligible municipalities may charge a tax of up to 0.5% in addition to the state transfer tax.

The State of Delaware transfer tax rate is 2.50%. Most counties also charge a county transfer tax rate of 1.50% for a combined transfer tax rate of 4.00%. Some areas do not have a county or local transfer tax rate. In those areas, the state transfer tax rate would be 3.00%. This includes Arden, Ardentown, and Ardencroft in New Castle County, which are villages with a single-tax system.

First-time home buyers in Delaware may receive a tax credit that reduces their transfer tax rate by 0.5%, up to a reduction of $2,000 on the first $400,000 of property value. If the transfer tax was split evenly between the buyer and seller (2% each), then a first-time home buyer would pay a transfer tax rate of only 1.50% for both state and county transfer taxes.

The District of Columbia charges two taxes when a property is transferred: a city recordation tax and a city transfer tax. The city recordation tax, also known as the deed recordation tax, is paid by the buyer. The city transfer tax, or the deed transfer tax, is paid by the seller as part of their seller closing costs . The tax rate for both taxes is 1.10% if the purchase price or assessed value is less than $400,000, and 1.45% on the entire amount for prices or values that are $400,000 or more.

This means the combined transfer tax rate in Washington D.C. would be 2.20% for properties less than $400,000 and 2.95% for properties over $400,000. First-time home buyers in Washington D.C. can have their recordation tax rate reduced to just 0.725%. To qualify, the purchase price must be less than $647,000. Household income limits also apply, ranging from $154,000 for single-buyers to $174,780 for couples.

Hawaii transfer tax depends on the property value and on the status of the property. If the property will be used as a primary residence, it qualifies for a homeowner's exemption and will have a reduced transfer tax rate that ranges from 0.1% to 1.0%. Properties that won't be a primary residence, such as second homes and vacation homes, will have a higher transfer tax rate that ranges from 0.15% to 1.25%.

Hawaii Transfer Tax Rates

The transfer tax rate in Illinois is 0.10% for all counties, including Cook County. Properties transferred within the City of Chicago will be charged supplemental transfer taxes. The City of Chicago transfer tax rate is 1.05% while the Cook County transfer tax rate is 0.05%. This means that the combined transfer tax rate in Chicago is 1.20%, while the rest of Illinois has a transfer tax rate of 0.10%.

Iowa charges a transfer tax of 0.16%, with the first $500 property value being exempt from the state’s transfer tax.

There is no state transfer tax in Louisiana. However, New Orleans charges a flat fee of $325 as a documentary tax for transfers within the city. The documentary tax also applies to mortgages. If the mortgage amount is less than $9,000, then a lower documentary tax may apply. For example, a loan amount of under $3,000 will only be charged a New Orleans documentary tax of $75.

Three different transfer taxes apply in Maryland: the state transfer tax, county transfer tax, and the recordation tax. Maryland's state transfer tax rate is 0.5%. First-time home buyers in Maryland will only need to pay a transfer tax rate of 0.25%.

The county transfer tax rate can range from 0.5% to as high as 1.50%, however, some counties charge no transfer tax such as Carroll County and Frederick County. All counties also charge a recordation tax that ranges from an additional 0.5% to 1.4%. Baltimore City has the highest transfer tax rates in Maryland, with a tax rate of 3.0%.

Maryland Transfer Tax Rates

The Massachusetts real estate transfer excise tax is currently $2.58 per $500 value transferred, which is a 0.456% tax rate. There is currently no Boston transfer tax, however, the City of Boston proposed a new transfer tax in January 2022. If passed, this new transfer tax would be 2.0% for amounts over $2 million, while the first $2 million will be exempt. This means that homes under $2 million will still have no Boston transfer tax applied in addition to the state’s 0.456% transfer tax.

Barnstable County, which includes parts of Cape Cod, has a higher transfer tax due to an additional county excise tax. The current state and county transfer tax in Barnstable County is 0.648%.

The state transfer tax in Michigan is 0.75%, while the county transfer tax in Michigan is 0.11%. This adds up to a total transfer tax rate of 0.86%.

Michigan's Real Estate Transfer Tax Act 134 of 1966 limits the transfer tax that counties can collect. Counties with a population of less than 2 million cannot have a transfer tax rate higher than 0.11%. Counties with a population of 2 million or more can have a transfer tax rate as high as 0.15%. However, as of 2022, there are no counties in Michigan with a population over 2,000,000. Wayne County, which includes Detroit, has a population of just under 1.8 million. The population of Wayne County was last above 2 million back in 2004, according to Data Commons .

Transfer tax in Minnesota is called a deed tax. For 2022, the deed tax rate in Minnesota is 0.33% for all counties. Hennepin County (Minneapolis) and Ramsey County (St. Paul) both charge an additional transfer tax of 0.01% as an Environmental Response Fund Tax.

Minnesota also charges a mortgage registry tax on the amount of your mortgage loan balance . Minnesota's mortgage registration tax rate is 0.24% in Hennepin County and Ramsey County including the 0.01% ERF Tax, and 0.23% in all other Minnesota counties. Mortgages taken by or given by religious organizations and educational institutions in Minnesota are still required to pay the state's mortgage registry tax.

Minnesota Transfer Tax Rates

Transfer tax in the State of Nevada is called Real Property Transfer Tax (RPTT). There are two base transfer tax rates in Nevada that are based on the county's population:

  • 0.13% (which is $0.65 per $500 value) in counties with a population of less than 700,000
  • 0.25% (which is $1.25 per $500 value) in counties with a population of 700,000 or more

Clark County, which includes Las Vegas, Boulder City, Henderson, and Mesquite, is the only county in Nevada in which the higher base transfer tax rate applies. The funds from the higher transfer tax rate goes towards the Clark County School District.

An additional state-wide transfer tax of 0.26% applies to all counties and goes towards the State General Fund. Churchill County and Washoe County also charge an additional transfer tax levy under the Local Government Tax Act of 1991.

Nevada Transfer Tax Rates

Ohio's transfer tax rate is 0.10%. Counties can also charge an additional transfer tax of up to 0.3%.

Ohio Transfer Tax Rates

There is no state transfer tax in Oregon. The exception to this is Washington County, which charges a county transfer tax of 0.1%. New transfer taxes are prohibited in Oregon as of 1997. Washington County's transfer tax has been grandfathered in.

Tennessee’s transfer tax rate is 0.37%. Mortgage borrowers will also need to pay an additional mortgage tax. In Tennessee, the mortgage recordation tax is 0.115% of the amount borrowed, with the first $2,000 being exempt from this tax.

Vermont charges both a property transfer tax and a clean water surcharge depending on the type of property and the property value. The property transfer tax can range from 0% to 1.25%, while the clean water surcharge is 0.2% on select property values. Homes purchased using a VT Housing and Conservation Trust Fund, VT Housing Finance Agency, or USDA loan are eligible for reduced transfer taxes.

In Vermont, the standard transfer tax for home buyers is 1.45% of the property value. However, if the property will be your primary residence, you only have to pay 0.5% on the first $100,000 and 1.45% on the remaining amount. This transfer tax exemption is available for all eligible residents of Vermont.

Vermont Transfer Tax Rates

The State of Washington introduced a tiered transfer tax in 2020 to replace the previous flat rate tax. This new real estate excise tax (REET) depends on the sale price of the property. The state transfer tax rate ranges from 1.1% to 3.0%. Sellers are responsible for paying transfer tax in Washington, however, buyers are responsible if the seller doesn’t pay.

Source: Washington Department of Revenue

In addition to the state transfer tax, local transfer taxes may apply depending on your county and city or town. Local transfer tax in Washington is usually either 0.25% or 0.50%. For example, the local transfer tax in Seattle is 0.50%. This is on top of the state’s transfer tax.

Two counties in Washington State have a local transfer tax that is greater than 0.50%. The City of Asotin, in Asotin County, has a local transfer tax of 0.75%.

San Juan County, which includes Friday Harbor and Unincorporated Areas of the county, has a total local transfer tax rate of 2.00%. This makes it the highest transfer tax rate in the state. 0.50% is for San Juan County Capital Projects, 0.50% is for San Juan County Housing, and 1.00% is for the Conservation Land Bank , which purchases land in San Juan County for preservation and public use. While sellers are responsible for transfer tax in Washington State, buyers of properties purchased within San Juan County are responsible for paying the 1% real estate excise tax towards the Conservation Land Bank.

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Since 2003, Dan Green has been a leading mortgage lender and respected industry authority. His unwavering commitment to first-time home buyers and home buyer education has established him as a trusted voice among his colleagues, his peers, and the media. Dan founded Homebuyer.com to expand the American Dream of Homeownership to all who want it. Read more about Dan Green .

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Loan Estimate Explainer for First-Time Buyers (with Examples)

Once you get pre-approved for a mortgage, comparing rates is important. However, what’s even more important is how you compare mortgage rates. You can do that with a loan estimate.

When it comes time to get a loan, every lender will provide you with a loan estimate. These estimates will help you decide which loan to choose. Don’t rely on banks to make the best decision for you.

Since everyone is different, we will break it down section by section and show you what is essential and how to compare rates.

Understanding Loan Estimates [And How To Get The Best Mortgage Rates]

  • →   What is a Loan Estimate?
  • →   What is Required to Get a Loan Estimate?
  • →   How to Read a Loan Estimate
  • →   Page One
  • →   Page Two
  • →   Page Three
  • →   Loan Estimate Example
  • →   What to Look Out For
  • →   How to Compare Mortgage Loan Estimates
  • →   How to Get Lower Loan Costs
  • →   Final Thoughts

What is a Loan Estimate?

A loan estimate is something that you get from a lender that lists essential information about your loan. It includes information such as the lender’s contact info and factors like the estimated interest rate, loan costs, closing costs, and other costs associated with a home purchase. The Consumer Financial Protection Bureau (CFPB) provides this standard, three-page document.

Once you have this information, you can compare rates from different lenders.

What is Required to Get a Loan Estimate?

To get a loan estimate, here is what is required:

  • Social Security number 
  • property address
  • estimated value of the property
  • desired loan amount

To get a more detailed estimate from your loan officer, you can also provide information like your debt information, specific loan type, and down payment amount.

How to Read a Loan Estimate

Below is a screenshot of a loan estimate sent to everyone. The sample we’re using exists on the CFPB website.

A Mortgage Loan Estimate And How To Read It - Part 1

Tip: Before you start, ensure that your loan estimate has the same fields as the example above. You should request a new one from your lender if it does not.

We’ll start right at the top.

There is general borrower information at the top of the loan estimate. Ficus Bank is a fictitious bank with a fake address.

Below that, on the left, you’ll find your name. Then the address of the property you’re looking to buy.

Image Snippet From A Mortgage Loan Estimate That Shows The Loan Summary Including Rate, Loan Size, And Terms

On the right, you’ll see the loan term, or how long it will take you to pay it back. The loan term will typically be 15 – 30 years.

Here’s what each of the items means:

  • Loan Term is how long it takes to pay off the loan with regular monthly payments.
  • Purpose is what you’re using the loan to do (buy a home)
  • Product refers to if the loan has a fixed rate or an adjustable rate
  • Loan Type is the type of loan used
  • Loan ID # is a reference number used by the lender in their systems
  • Rate Lock is whether the interest rate has been secured or is still subject to daily market changes

Below the opening section, you’ll see your loan terms.

Image Snippet From A Mortgage Loan Estimate That Shows A Review Of Loan Terms

  • Loan Amount is the amount you’re borrowing or the amount you’re pre-approved for
  • Interest Rate is how the amount of interest you pay to the lender
  • Monthly Principal & Interest is your mortgage payment, not including property tax or insurance
  • Prepayment Penalty is if there is a fee for paying off the loan early
  • Balloon Payment is if there is an outstanding amount to be paid at the end of the loan term

Projected Payments

Next is the Projected Payments section. This section gets broken into two sub-sections, Years 1-7 and 8-30. It is in two parts because it can vary based on whether or not a mortgage insurance payment is involved.

Image Snippet From A Mortgage Loan Estimate That Shows The Projected Payments Section

It is listed 8-30 because this example is a 30-year loan, as shown in the section above.

Let’s take a look at some of the terms in this section:

  • Principal  covers the amount of your monthly payment that goes towards paying down your loan balance
  • Interest covers the amount that goes towards paying interest fees to the lender
  • Mortgage Insurance  is a monthly payment needed that allows buyers to purchase a home with a down payment of less than 20%
  • Estimated Escrow is your monthly payment for property taxes and homeowners insurance
  • Estimated Taxes, Insurance & Assessments  account for property taxes, homeowner’s insurance, and homeowner’s association dues

The payment structure gets broken down into estimated monthly payments, including the mortgage insurance of $82. This fee will get paid every month until paid enough for you to have 20 percent equity or an 80 percent loan to value in your property. In this case, it would be every month for seven years.

Then you’ll see the total of years 1-7 and the 8-30.

Costs at Closing

These estimate closing costs and cash to close refer to totals listed on page two. The Estimated Closings Costs include loan costs, other costs, and lender credits.

Graphic: Looking At A Mortgage Loan Estimate

The Estimated Cash to Close total refers to the amount of cash you will need up-front when closing on your home. This includes your lender fees, third-party charges, and down payment.

Tip: The majority of page one is estimated. Moving forward, we’ll point out what is most important.

The second page is a breakdown of all closing costs and prepaids. We’ll start at the top left.

Loan Costs – A. Origination Charges

The first section is the Loan Costs, and the subheading gathers your Origination Charges, which is the most crucial section on this entire form. Origination Charges combine your Points, Application Fee, and Underwriting Fee.

Image Snippet From A Mortgage Loan Estimate That Shows The Mortgage Loan Origination Charges

These origination charges can be called different things by different lenders.

In this case, Loan Amount (Points) refers to an origination fee charged as a percentage of your loan amount. In some cases, you may see a negative number here called a “lender credit.” This credit refers to what the lender receives to help pay closing costs.

  • Application Fee is a cost associated with processing your mortgage loan and can vary based on the lender.
  • Underwriting Fee covers the costs associated with verifying the financial information required to get your mortgage.

Remember, the lender controls this section. Some lenders itemize a dozen different fees, and some include everything in one line item. Another term you may see is Origination or Origination Fee , which is a charge assessed by a mortgage lender to process your loan.

The main number you want to look at is the total, in bold at the top of the section.

Loan Costs – B. Services You Cannot Shop For

Down in section B, you have Services You Cannot Shop For. Those are services that lenders source for you. These include an Appraisal Fee, a Credit Report Fee, Flood Determination Fee, Flood Monitoring Fee, Tax Monitoring Fee, and Tax status Research Fee.

Image Snippet From A Mortgage Loan Estimate That Shows The Services Home Buyers Cannot Shop For

Here’s what they mean:

  • Appraisal Fee is the amount paid to the home appraiser
  • Credit Report Fee is the cost of your credit report
  • Flood Determination Fee is for determining if the home is in a flood zone
  • Flood Monitoring Fee is to monitor flood maps and make sure the house doesn’t fall into a flood zone in the future
  • Tax Monitoring Fee is for tax account monitoring, so the proper parties get notified if there’s ever an unpaid tax bill
  • Tax Status Research Fee is to verify the amount due each year and make sure property taxes get paid on time

Since you can’t shop for them and the lender sources those services to you, the most important number is in bold at the top of section B.

Loan Costs – C. Services You Can Shop For

Services You Can Shop For are good to know, but this is an estimate. These costs can vary from lender to lender based on how they estimate these fees for you.

Image Snippet From A Mortgage Loan Estimate That Shows The Services You Can Shop For Section

Most are self-explanatory, but we’ll briefly break them down for you here:

  • Pest Inspection Fee is to have the home inspected for hard to find pests
  • Survey Fee is to confirm that the property lines match what is on file with the county
  • Title – Insurance Binder is a temporary form of real estate insurance coverage related to the transfer of ownership
  • Title – Lender’s Title Policy is to protect the lender against any title dispute that comes up in the future
  • Title – Settlement Agent Fee is for your escrow or closing agent who gathers and disburses all documents and money from buyer and seller in the transaction
  • Title – Title Search is to research and confirm that the property legally belongs to the owner and they have rights to sell it to you

These are important when comparing quotes if the total number varies by a lot of money. If they differ slightly, don’t worry. They’re just estimates.

All of those fees will be consistent across the board when you close on the house, no matter what lender you close.

Loan Costs – D. Total Loan Costs

This section adds up the totals from A, B, and C.

Image Snippet From A Mortgage Loan Estimate That Shows Total Loan Costs

Other Costs – E. Taxes and Other Government Fees

The right-hand column lists your Taxes and Other Government Fees similar to your other costs.

Image Snippet From A Mortgage Loan Estimate That Shows The Taxes And Government Fees

The listed elements and what they mean are:

  • Recording Fees and other taxes get paid to the county for recording the sale as public record
  • Transfer Taxes go to the county for the transfer of the deed from the seller to the buyer

These costs will be the same when you close, no matter the lender.

Other Costs – F. Prepaids

Section F includes your Prepaids. These are estimated costs that you have to pay up-front.

Image Snippet From A Mortgage Loan Estimate That Shows The Prepaid Items Section

These include:

  • Homeowner’s Insurance Premium is the number of months of homeowners insurance payments that are due up-front
  • Mortgage Insurance Premium is the number of months of mortgage insurance payments that are due up-front
  • Prepaid Interest is the number of days of interest that is due up-front, accounting for the day you close until the end of the month
  • Property Taxes is the number of months of property tax payments that are due up-front

Again, don’t worry about the exact dollar amount in this section because these are only estimates, and they’re going to vary from lender to lender.

Other Costs – G. Initial Escrow Payment at Closing

The Initial Escrow at Closing section is money due at closing, similar to the Prepaids in the previous section.

However, these are different than Prepaids because they go towards setting up your escrow account, which allows you to pay these costs monthly as part of your mortgage payment.

Escrow accounts ensure you won’t be surprised by significant lump-sum payments and make for easy budgeting.

An Image Showing How Escrow Is Calculated At Closing

Some of the line items you’ll see here include:

  • Homeowner’s Insurance protects the home and its contents against unexpected damage and events. Flood insurance is separate from homeowner’s insurance and will also show up in this section.
  • Mortgage Insurance allows you to buy a home with less than 20 percent down
  • Property Taxes are the taxes paid to the county or state for owning your home

Other Costs – H. Other

The Other section includes costs that don’t fit in sections A-H. These might consist of title fees like the “Title – Owner’s Title Policy” that you see in the screenshot.

Image Snippet From A Mortgage Loan Estimate That Shows The Owners Title Policy

An Owner’s Title Policy protects the buyer against any title dispute in the future.

Other Costs – H. Total Other Costs

Your Total Other Costs section adds sections E-H.

Image Snippet From A Mortgage Loan Estimate That Shows The Total Other Costs Section

When comparing quotes, make sure that this number is close. It doesn’t have to be an exact match because they are estimated. And when you close, all the costs are going to be the same no matter what lender you go with

That’s not something you’re going to negotiate over.

Other Costs – J. Total Closing Costs

The Total Closing Costs section is your Total Other Costs, plus your Total Loan Costs, minus any lender credits you may receive.

Image Snippet From A Mortgage Loan Estimate That Shows Total Closing Costs

Calculating Cash to Close

Calculating cash to close will be different for every transaction. These differ based on the deposit that you have or haven’t put into escrow.

Illustration: Calculating How Much Cash You'Ll Need To Close On Your Home

  • Estimated Cash to Close shows you how much total money will come out-of-pocket (including your down payment) when you’re buying the home.

Tip: Don’t get caught up in estimated figures. It’s good for you to know so you can have a ballpark of how much money it’s going to take to buy the house. But when comparison shopping, those estimates aren’t that important.

You’ll find additional information about the lender moving to the third page.

Graphic: Additional Information In The Loan Estimate About Your Mortgage Loan

This page includes your mortgage expert’s company name, licensing information, and contact info.

Comparisons

Then there’s your Comparison section. This section shows you three items with simple explanations of each.

Image Snippet From A Mortgage Loan Estimate That Shows How To Compare Multiple Quotes

  • In 5 Years is the total you have paid in principal, interest, mortgage insurance, and loan costs. Then, just the principal
  • Annual Percentage Rate  is your total costs over the loan term expressed as a rate. Note that this is not your interest rate
  • Total Interest Percentage is the total amount of interest you will pay over the loan term as a percentage of your loan amount

Although this is the comparison section, they are estimated figures, so we don’t recommend using them in comparison shopping.

If you must use one of these fields, use the in five years field because that’s the most user-friendly and a decent barometer.

Other Considerations

The Other Considerations section includes special information relevant to your loan. This will look different depending on the type of loan you choose or how much money you put down.

Image Snippet From A Mortgage Loan Estimate That Shows The Other Considerations Section

Based on this loan estimate example, here’s a breakdown of what each refers to.

  • Appraisals  help determine the value of your home and are required for any home purchase
  • Assumption  lets the lender specify whether or not this loan, and its terms, can be transferred to another person if you sell the property
  • Homeowner’s insurance is usually required when buying a home so the home, and its contents, are protected against unexpected events
  • Late Payment is like a phone bill or water bill; you’ll incur late fees if you do not pay on time. The specific fees might differ from what you see in the example
  • Refinance  is the process of replacing your current mortgage loan with a new one. There are certain elements that might affect whether or not you are eligible for a refinance, such as volatile market conditions, property value fluctuations or changes in your finances
  • Servicing refers to collecting and tracking your loan payments. In the example, there are checkboxes with the option for the lender to service the loan or to transfer the servicing to a third party

Loan Estimate Example

You can see the full loan estimate example from the Consumer Finance site or look below.

What to Look Out For

In every loan estimate, there are some things to look out for. The most important is the aforementioned tip to make sure your loan estimate is formatted in the same way as Consumer Finance’s example. Also, these are estimates, so they may change.

And because these are estimates, be wary of the following:

Lenders might underestimate

Lenders out there may not be the most “borrower first.” Lenders may purposely underestimate these costs, especially taxes, insurance, and mortgage insurance.

Underestimating these costs can make their quote look far better than it will be when it comes to closing time.

Lenders might overestimate

Other lenders may purposefully overestimate these costs, knowing that you might ask for lower ones. That way, when it comes time to close the loan, they get to be the hero and provide some good news.

Both of those things are terrible for comparison shopping, and they’re even worse for your budgeting. You want accurate figures. At Homebuyer and plenty of other lenders, these costs get estimated as close to 100 percent accurate as possible.

Remember that numbers are never exact upfront. Don’t worry about any estimated fees that your lender doesn’t dictate.

How to Compare Mortgage Loan Estimates

Concentrate on the top left section of page two of the loan estimate when comparing rates. This section is what the lender has control over.

It doesn’t matter what the origination charges are. It doesn’t matter how they get itemized. It doesn’t matter what the lender labels them as. The only thing that matters is the total amount of origination charges you’re paying and the services you cannot shop for.

If you look above, you have $1,802 in origination charges and $672 in services you cannot shop for. That’s a total of $2,474. The $2,474 is how much the lender is charging to give a rate of 3.875%. That rate gets listed at the top of page one, in the Loan Terms section.

This $2,474 is what it’s going to cost you in loan fees. The lender doesn’t control the prices and costs for anything else.

How to Get Lower Loan Costs

It is possible to get $0 in loan costs, but your interest rate may be higher. Most lenders will give you the option to pay less money out-of-pocket in exchange for a higher interest rate. This option typically results in the buyer receiving a lender credit for the amount of their closing costs.

Conversely, you may be able to pay more money upfront for a lower interest rate and a lower monthly payment.

The choice is yours, and it comes down to your goals and preferences. Be sure to ask your lender if these options would be available to you.

Final Thoughts

We believe that you should be the most educated and prepared home buyer possible. To understand a loan estimate and compare quotes from different lenders, focus on the most critical variables: loan costs and interest rates.

Isolating these makes a loan estimate easier to read and allows you to make a confident decision when working with your lender.

We always recommend comparing rates from multiple lenders before committing to one. The first deal you find might not be the best one for you.

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Mortgage Rate Assumptions

The mortgage rates shown on this page make assumptions about you, your home and location, and are accurate as of . Mortgage rates change without notice based on mortgage bond market activity.

The mortgage rates shown on this page make assumptions about you, your home and location, and are accurate as of {{ formatDate(rates[0].createdAt) }}. Mortgage rates change without notice based on mortgage bond market activity.

Legal Disclosures

Your actual mortgage rate, APR, points, and monthly payment are unlikely to match the table above unless you are a first-time buyer purchasing a single-family home to be your primary residence in any state other than New York, Hawaii, and Alaska, you have a credit score of {{ rates.length ? rates[0].fico : '760' }} or higher, you are making the minimum down payment required for the respective loan type, you are using 30-year fixed-rate mortgage, and you earn a low-to-moderate household income relative to your area.

The information provided is for informational purposes only and should not be confused for a mortgage rate commitment or a mortgage loan approval. You may receive a mortgage rate quote that is lower or higher than what's shown above. In many scenarios, you will have the option to pay discount points for a lower mortgage rate or receive a rebate in exchange for higher rates.

{{ rate.loanType }}. The {{ formatRate(rate.rate) }} mortgage rate ({{ formatRate(rate.apr) }} APR) is based on information retrieved on {{ formatDate(rate.createdAt) }}. This rate requires {{ formatPoints(rate.points) }} discount points at closing, which costs {{ formatPoints(rate.points) }}% of the starting principal balance. Assuming a loan size of {{ formatDollars(rate.loanAmount) }}, the monthly payment for the mortgage with the above terms is {{ formatDollars(rate.monthlyPayment) }} for 360 months, plus taxes and insurance premiums. {{ rate.lender }} provides this information for estimation purposes only and does not guarantee accuracy. Your mortgage rate, APR, loan size, and fees may vary.

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The Homebuyer.com mortgage rates shown on this page are based on assumptions about you, your home, and the state where you plan to purchase. The rate shown is accurate as of , but please remember that mortgage rates change without notice based on mortgage bond market activity.

The Homebuyer.com mortgage rates shown on this page are based on assumptions about you, your home, and the state where you plan to purchase. The rate shown is accurate as of {{ formatDate(rates[0].createdAt) }}, but please remember that mortgage rates change without notice based on mortgage bond market activity.

Our mortgage rate assumptions may differ from those made by the other mortgage lenders in the comparison table. Your actual mortgage rate, APR, points, and monthly payment are unlikely to match the table above unless you match the description below:

You are a first-time buyer purchasing a single-family home to be your primary residence in any state other than New York, Hawaii, and Alaska. You have a credit score of {{ rates.length ? rates[0].fico : '760' }} or higher. You are making a down payment of twenty percent and using a 30-year conventional fixed-rate mortgage. You earn a low-to-moderate household income relative to your area.

The information provided is for informational purposes only and should not be confused for a mortgage rate commitment or a mortgage loan approval.

{{ rate.lender }}. The {{ formatRate(rate.rate) }} mortgage rate ({{ formatRate(rate.apr) }} APR) shown above for {{ rate.lender}} is based on information published on the lender's website and retrieved on {{ formatDate(rate.createdAt) }}. According to its website, {{ rate.lender }}'s published rate requires home buyers to pay {{ formatPoints(rate.points) }} points at closing, totaling {{ formatDollars(rate.cost) }}, on an example {{ formatDollars(rate.loanAmount) }} 30-year fixed-rate conventional mortgage. Its mortgage rate assumes the home buyer will make a {{ formatDollars(rate.downPayment) }} downpayment or larger and purchase a single-family residence. Its mortgage rate also assumes that the home buyer will have a credit score of {{ rate.fico }} or higher. The monthly payment for the mortgage with the above terms is {{ formatDollars(rate.monthlyPayment) }} for 360 months, plus taxes and insurance premiums. {{ rate.lender }} provides this information for estimation purposes only and does not guarantee accuracy. Your mortgage rate, APR, loan size, and fees may vary.

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Consumer Financial Protection Bureau

Comment for 1026.37 - Content of Disclosures for Certain Mortgage Transactions (Loan Estimate)

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1. Disclosures not applicable. The disclosures required by § 1026.37 are required to reflect the terms of the legal obligation between the parties, and if any information necessary for an accurate disclosure is unknown to the creditor, the creditor shall make the disclosure in good faith, based on the best information reasonably available to the creditor pursuant to §§ 1026.17(c) and 1026.19(e). See comments 17(c)(1)-1, 17(c)(2)(i)-1 and -2, and 19(e)(1)(i)-1. Where a disclosure is not applicable to a particular transaction, unless otherwise provided by § 1026.37, form H-24 of appendix H to this part may not be modified to delete the disclosure from form H-24, or to state “not applicable” or “N/A” in place of such disclosure. The portion of the form pertaining to the inapplicable disclosure may be left blank, unless otherwise provided by § 1026.37. For example, in a transaction for which the consumer does not pay points to the creditor to reduce the interest rate, the amounts required to be disclosed by § 1026.37(f)(1)(i) may be left blank on form H-24. As provided in § 1026.37(i) and (j), however, the adjustable payment and adjustable interest rate tables required by those paragraphs may be included only if those disclosures are applicable to the transaction and otherwise must be excluded.

2. Format. See § 1026.37(o) and its commentary for guidance on the proper format to be used in making the disclosures, as well as permissible modifications.

37(a) General information.

37(a)(3) creditor..

1. Multiple creditors. For transactions with multiple creditors, see § 1026.17(d) and comment 17(d)-1 for further guidance. The creditor making the disclosures, however, must be identified as the creditor for purposes of § 1026.37(a)(3).

2. Mortgage broker as loan originator. In transactions involving a mortgage broker, the name and address of the creditor must be disclosed, if known, even if the mortgage broker provides the disclosures to the consumer under § 1026.19(e)(1)(ii). As required by § 1026.19(e)(1)(i), the mortgage broker must make a good faith effort to disclose the name and address of the creditor, but if the name of the creditor is not yet known, the disclosure required by § 1026.37(a)(3) may be left blank. See comment 37-1.

37(a)(4) Date issued.

1. Applicable date. Section 1026.37(a)(4) requires disclosure of the date the creditor mails or delivers the Loan Estimate to the consumer. The creditor's method of delivery does not affect the date issued. For example, if the creditor hand delivers the Loan Estimate to the consumer on August 14, or if the creditor places the Loan Estimate in the mail on August 14, the date disclosed under § 1026.37(a)(4) is August 14.

2. Mortgage broker as loan originator. In transactions involving a mortgage broker, the date disclosed is the date the mortgage broker mails or delivers the Loan Estimate to the consumer, because pursuant to § 1026.19(e)(1)(ii), the mortgage broker is required to comply with all relevant requirements of § 1026.19(e).

37(a)(5) Applicants.

1. Multiple consumers. If there is more than one consumer applying for the credit, § 1026.37(a)(5) requires disclosure of the name and the mailing address of each consumer to whom the Loan Estimate will be delivered. If the names and mailing addresses of all consumers applying for the credit do not fit in the space allocated on the Loan Estimate, an additional page with that information may be appended to the end of the form. For additional information on permissible changes, see § 1026.37(o)(5) and its commentary.

37(a)(6) Property.

1. Alternate property address. Section 1026.37(a)(6) requires disclosure of the address including the zip code of the property that secures or will secure the transaction. A creditor complies with § 1026.37(a)(6) by disclosing a complete address for purposes of the U.S. Postal Service. If the address is unavailable, a creditor complies with § 1026.37(a)(6) by disclosing the location of such property including a zip code, which is required in all instances. Location of the property under § 1026.37(a)(6) includes location information, such as a lot number. The disclosure of multiple zip codes is permitted if the consumer is investigating home purchase opportunities in multiple zip codes.

2. Personal property. Where personal property also secures the credit transaction, a description of that property may be disclosed, at the creditor's option pursuant to § 1026.37(a)(6), if a description fits in the space provided on form H-24 for the disclosure required by § 1026.37(a)(6). An additional page may not be appended to the form to disclose a description of personal property.

3. Multiple properties. Where more than one property secures the credit transaction, § 1026.37(a)(6) requires disclosure of all properties. If the addresses of all properties securing the transaction do not fit in the space allocated on the Loan Estimate, an additional page with that information with respect to real properties may be appended to the end of the form.

37(a)(7) Sale price.

1. Estimated property value. In transactions where there is no seller, such as in a refinancing, § 1026.37(a)(7)(ii) requires the creditor to disclose the estimated value of the property identified in § 1026.37(a)(6) based on the best information reasonably available to the creditor at the time the disclosure is provided to the consumer, which may include, at the creditor's option, the estimated value of the improvements to be made on the property in transactions involving construction. The creditor may use the estimate provided by the consumer at application unless it has performed its own estimate of the property value by the time the disclosure is provided to the consumer, in which case the creditor must use its own estimate. If the creditor has obtained any appraisals or valuations of the property for the application at the time the disclosure is issued to the consumer, the value determined by the appraisal or valuation to be used during underwriting for the application is disclosed as the estimated property value. If the creditor has obtained multiple appraisals or valuations and has not yet determined which one will be used during underwriting, it may disclose the value from any appraisal or valuation it reasonably believes it may use in underwriting the transaction. In a transaction that involves a seller, if the sale price is not yet known, the creditor complies with § 1026.37(a)(7) if it discloses the estimated value of the property that it used as the basis for the disclosures in the Loan Estimate.

2. Personal property. In transactions involving personal property that is separately valued from real property, only the value of the real property or cooperative unit is disclosed under § 1026.37(a)(7). Where personal property is included in the sale price of the real property or cooperative unit (for example, if the consumer is purchasing the furniture inside the dwelling), however, § 1026.37(a)(7) permits disclosure of the aggregate price without any reduction for the appraised or estimated value of the personal property.

37(a)(8) Loan term.

1. Partial years.

i. Terms to maturity of 24 months or more. Section 1026.37(a)(8) requires disclosure of the term to maturity in years, or months, or both, as applicable. Where the term exceeds 24 months and equals a whole number of years, a creditor complies with § 1026.37(a)(8) by disclosing the number of years, followed by the designation “years.” Where the term exceeds 24 months but does not equal a whole number of years, a creditor complies with § 1026.37(a)(8) by disclosing the term to maturity as the number of years followed by the designation “yr.” and the remaining number of months, followed by the designation “mo.” For example, if the term to maturity of the transaction is 185 months, the correct disclosure would be “15 yr. 5 mo.”

ii. Terms to maturity of less than 24 months. If the term to maturity is less than 24 months and does not equal a whole number of years, a creditor complies with § 1026.37(a)(8) by disclosing the number of months only, followed by the designation “mo.” For example, if the term to maturity of a transaction is six months or 16 months, it would be disclosed as “6 mo.” or “16 mo.,” respectively. If the term to maturity is 12 months, however it would be disclosed simply as “1 year.”

2. Adjustable loan term. Section 1026.37(a)(8) requires disclosure of the term to maturity of the credit transaction. If the term to maturity is adjustable, i.e., it is not known with certainty at consummation, the creditor complies with § 1026.37(a)(8), if it discloses the possible range of the loan term, including the maximum number of years possible under the terms of the legal obligation. For example, if the loan term depends on the value of interest rate adjustments during the term of the loan, to calculate the maximum loan term, the creditor assumes that the interest rate rises as rapidly as possible after consummation, taking into account the terms of the legal obligation, including any applicable caps on interest rate adjustments and lifetime interest rate cap.

3. Loan term start date. See comment app. D-7.i for an explanation of how a creditor discloses the loan term of a multiple-advance loan to finance the construction of a dwelling that may be permanently financed by the same creditor.

37(a)(9) Purpose.

1. General. Section 1026.37(a)(9) requires disclosure of the consumer's intended use of the credit. In ascertaining the consumer's intended use, § 1026.37(a)(9) requires the creditor to consider all relevant information known to the creditor at the time of the disclosure. If the purpose is not known, the creditor may rely on the consumer's stated purpose. The following examples illustrate when each of the permissible purposes should be disclosed:

i. Purchase. The consumer intends to use the proceeds from the transaction to purchase the property that will secure the extension of credit. In a purchase transaction with simultaneous subordinate financing, the simultaneous subordinate loan is also disclosed with the purpose “Purchase.”

ii. Refinance. The consumer refinances an existing obligation already secured by the consumer's dwelling to change the rate, term, or other loan features and may or may not receive cash from the transaction. For example, in a refinance with no cash provided, the new amount financed does not exceed the unpaid principal balance, any earned unpaid finance charge on the existing debt, and amounts attributed solely to the costs of the refinancing. Conversely, in a refinance with cash provided, the consumer refinances an existing mortgage obligation and receives money from the transaction that is in addition to the funds used to pay the unpaid principal balance, any earned unpaid finance charge on the existing debt, and amounts attributed solely to the costs of the refinancing. In such a transaction, the consumer may, for example, use the newly-extended credit to pay off the balance of the existing mortgage and other consumer debt, such as a credit card balance.

iii. Construction. Section 1026.37(a)(9)(iii) requires the creditor to disclose that the loan is for construction in transactions where the creditor extends credit to finance only the cost of initial construction (construction-only loan), not renovations to existing dwellings, and in transactions where a multiple advance loan may be permanently financed by the same creditor (construction-permanent loan). In a construction-only loan, the borrower may be required to make interest-only payments during the loan term with the balance commonly due at the end of the construction project. For additional guidance on disclosing construction-permanent loans, see § 1026.17(c)(6)(ii), comments 17(c)(6)-2, -3, and -5, and appendix D to this part.

iv. Home equity loan. The creditor is required to disclose that the credit is for a “home equity loan” if the creditor intends to extend credit for any purpose other than a purchase, refinancing, or construction. This disclosure applies whether the loan is secured by a first or subordinate lien.

2. Refinance coverage. The disclosure requirements under § 1026.37(a)(9)(ii) apply to credit transactions that meet the definition of a refinancing under § 1026.20(a) but without regard to whether they are made by a creditor, holder, or servicer of the existing obligation. Section 1026.20(a) applies only to refinancings undertaken by the original creditor or a holder or servicer of the original debt. See comment 20(a)-5.

37(a)(10) Product.

1. No features. If the loan product disclosed pursuant to § 1026.37(a)(10) does not include any of the features described in § 1026.37(a)(10)(ii), only the product type and introductory and first adjustment periods, if applicable, are disclosed. For example:

i. Adjustable rate. When disclosing an adjustable rate product, the disclosure of the loan product must be preceded by the length of the introductory period and the frequency of the first adjustment period thereafter. Thus, for example, if the loan product is an adjustable rate with an introductory rate that is fixed for the first five years of the loan term and then adjusts every three years starting in year six, the disclosure required by § 1026.37(a)(10) is “5/3 Adjustable Rate.” If the first adjustment period is not the period for all adjustments under the terms of the legal obligation, the creditor should still disclose the initial adjustment period and should not disclose other adjustment periods. For example, if the loan product is an adjustable rate with an introductory rate that is fixed for the first five years of the loan term and then adjusts every three years starting in year six, and then annually starting in year fifteen, the disclosure required by § 1026.37(a)(10) would still be “5/3 Adjustable Rate.”

A. No introductory period. If the loan product is an adjustable rate with no introductory rate, the creditor should disclose “0” where the introductory rate period would ordinarily be disclosed. For example, if the loan product is an adjustable rate that adjusts every three years with no introductory period, the disclosure required by § 1026.37(a)(10) is “0/3 Adjustable Rate.”

B. Introductory period not yet known. If the loan product is an adjustable rate with an introductory period that is not yet known at the time of delivery of the Loan Estimate, the creditor should disclose the shortest potential introductory period for the particular loan product offered. For example, if the loan product is an adjustable rate with an introductory period that may be between 36 and 48 months and the rate would then adjust every year, the disclosure required by § 1026.37(a)(10) is “3/1 Adjustable Rate.”

ii. Step rate. If the loan product is a step rate with an introductory interest rate that lasts for ten years and adjusts every year thereafter for the next five years, and then adjusts every three years for the next 15 years, the disclosure required by § 1026.37(a)(10) is “10/1 Step Rate.” If the loan product is a step rate with no introductory rate, the creditor should disclose “0” where the introductory rate period would ordinarily be disclosed.

iii. Fixed rate. If the loan product is not an adjustable rate or a step rate, as described in § 1026.37(a)(10)(i)(A) and (B), even if an additional feature described in § 1026.37(a)(10)(ii) may change the consumer's periodic payment, the disclosure required by § 1026.37(a)(10)(i) is “Fixed Rate.”

2. Additional features. When disclosing a loan product with at least one of the features described in § 1026.37(a)(10)(ii), § 1026.37(a)(10)(iii) and (iv) require the disclosure of only the first applicable feature in the order of § 1026.37(a)(10)(ii) and that it be preceded by the time period or the length of the introductory period and the frequency of the first adjustment period, as applicable, followed by a description of the loan product and its time period as provided for in § 1026.37(a)(10)(i). For example:

i. Negative amortization. Some loan products, such as “payment option” loans, permit the borrower to make payments that are insufficient to cover all of the interest accrued, and the unpaid interest is added to the principal balance. Where the loan product includes a loan feature that may cause the loan balance to increase, the disclosure required by § 1026.37(a)(10)(ii)(A) is preceded by the time period that the borrower is permitted to make payments that result in negative amortization ( e.g., “2 Year Negative Amortization”), followed by the loan product type. Thus, a fixed rate product with a step-payment feature for the first two years of the legal obligation that may negatively amortize is disclosed as “2 Year Negative Amortization, Fixed Rate.”

ii. Interest only. When disclosing an “Interest Only” feature, as defined in § 1026.18(s)(7)(iv), the applicable time period must precede the label “Interest Only.” Thus, a fixed rate loan with only interest due for the first five years of the loan term is disclosed as “5 Year Interest Only, Fixed Rate.” If the interest only feature fails to cover the total interest due, then, as required by § 1026.37(a)(10)(iii), the disclosure must reference the negative amortization feature and not the interest only feature ( e.g., “5 Year Negative Amortization, Fixed Rate”). See comment app. D-7.ii for an explanation of the disclosure of the time period of an interest only feature for a construction loan or a construction-permanent loan.

iii. Step payment. When disclosing a step payment feature (which is sometimes referred to instead as a graduated payment), the period of time at the end of which the scheduled payments will change must precede the label “Step Payment” ( e.g., “5 Year Step Payment”) followed by the name of the loan product. Thus, a fixed rate mortgage subject to a 5-year step payment plan is disclosed as a “5 Year Step Payment, Fixed Rate.”

iv. Balloon payment. If a loan product includes a “balloon payment,” as that term is defined in § 1026.37(b)(5), the disclosure of the balloon payment feature, including the year the payment is due, precedes the disclosure of the loan product. Thus, if the loan product is a step rate with an introductory rate that lasts for three years and adjusts each year thereafter until the balloon payment is due in the seventh year of the loan term, the disclosure required is “Year 7 Balloon Payment, 3/1 Step Rate.” If the loan product includes more than one balloon payment, only the earliest year that a balloon payment is due shall be disclosed.

v. Seasonal payment. If a loan product includes a seasonal payment feature, § 1026.37(a)(10)(ii)(E) requires that the creditor disclose the feature. The feature is not, however, required to be disclosed with any preceding time period. Disclosure of the label “Seasonal Payment” without any preceding number of years satisfies this requirement.

3. Periods not in whole years.

i. Terms of 24 months or more. For product types and features that have introductory periods or adjustment periods that do not equate to a number of whole years, if the period is a number of months that is 24 or greater and does not equate to a whole number of years, § 1026.37(a)(10) requires disclosure of the whole number of years followed by a decimal point with the remaining months rounded to two places. For example, if the loan product is an adjustable rate with an introductory period of 30 months that adjusts every year thereafter, the creditor would be required to disclose “2.5/1 Adjustable Rate.” If the introductory period were 31 months, the required disclosure would be 2.58/1 Adjustable Rate.”

ii. Terms of less than 24 months. For product types and features that have introductory periods or adjustment periods that do not equate to a number of whole years, if the period is less than 24 months, § 1026.37(a)(10) requires disclosure of the number of months, followed by the designation “mo.” For example, if the product type is an adjustable rate with an 18-month introductory period that adjusts every 18 months starting in the 19th month, the required disclosure would be “18 mo./18mo. Adjustable Rate.”

iii. Adjustments more frequent than monthly. For adjustment periods that change more frequently than monthly, § 1026.37(a)(10) requires disclosure of the applicable unit-period, such as daily, weekly, or bi-weekly. For example, for an adjustable rate construction loan with no introductory fixed rate period where the interest rate adjusts every seven days, the disclosure required by § 1026.37(a)(10) is “0/Weekly Adjustable Rate.”

37(a)(11) Loan type.

1. Other. If the transaction is a type other than a conventional, FHA, or VA loan, § 1026.37(a)(11)(iv) requires the creditor to disclose the loan type as “Other” and provide a name or brief description of the loan type. For example, a loan that is guaranteed or funded by the Federal government under the Rural Housing Service (RHS) of the U.S. Department of Agriculture is required to be disclosed under the subcategory “Other.” Section 1026.37(a)(11)(iv) requires a brief description of the loan type ( e.g., “RHS”). A loan that is insured or guaranteed by a State agency must also be disclosed as “Other.”

37(a)(12) Loan identification number (Loan ID # ).

1. Unique identifier. Section 1026.37(a)(12) requires that the creditor disclose a loan identification number that may be used by the creditor, consumer, and other parties to identify the transaction, labeled as “Loan ID # .” The loan identification number is determined by the creditor, which number may contain any alpha-numeric characters. Because the number must allow for the identification of the particular credit transaction under § 1026.37(a)(12), a creditor must use a unique loan identification number, i.e., the creditor may not use the same loan identification number for different, but related, loan transactions (such as different loans to the same borrower). Where a creditor issues a revised Loan Estimate for a transaction, the loan identification number must be sufficient to enable identification of the transaction pursuant to § 1026.37(a)(12).

37(a)(13) Rate lock.

1. Interest rate. For purposes of § 1026.37(a)(13), the interest rate is locked for a specific period of time if the creditor has agreed to extend credit to the consumer at a given rate, subject to contingencies that are described in any rate lock agreement between the creditor and consumer.

2. Expiration date. The disclosure required by § 1026.37(a)(13)(ii) related to estimated closing costs is required regardless of whether the interest rate is locked for a specific period of time or whether the terms and costs are otherwise accepted or extended. If the consumer fails to indicate an intent to proceed with the transaction within 10 business days after the disclosures were originally provided under § 1026.19(e)(1)(iii) (or within any longer time period established by the creditor), then, for determining good faith under § 1026.19(e)(3)(i) and (ii), a creditor may use a revised estimate of a charge instead of the amount originally disclosed under § 1026.19(e)(1)(i). See comment 19(e)(3)(iv)(E)-2.

3. Time zone. The disclosure required by § 1026.37(a)(13) requires the applicable time zone for all times provided, as determined by the creditor. For example, if the creditor is located in New York and determines that the Loan Estimate will expire at 5:00 p.m. in the time zone applicable to its location, while standard time is in effect, the disclosure must include a reference to the Eastern time zone ( i.e., 5:00 p.m. EST).

4. Revised disclosures. Once the consumer indicates an intent to proceed within the time specified by the creditor under § 1026.37(a)(13)(ii), the date and time at which estimated closing costs expire are left blank on any subsequent revised disclosures. The creditor may extend the period of availability to expire beyond the time disclosed under § 1026.37(a)(13)(ii). If the consumer indicates an intent to proceed within that longer time period, the date and time at which estimated closing costs expire are left blank on subsequent revised disclosures, if any. See comment 19(e)(3)(iv)-5.

37(b) Loan terms.

1. Legal obligation. The disclosures required by § 1026.37 must reflect good faith estimates of the credit terms to which the parties will be legally bound for the transaction. Accordingly, if certain terms of the transaction are known or reasonably available to the creditor, based on information such as the consumer's selection of a product type or other information in the consumer's application, § 1026.37 requires the creditor to disclose those credit terms. For example, if the consumer selects a product type with a prepayment penalty, § 1026.37(b)(4) requires disclosure of the maximum amount of the prepayment penalty and period in which the prepayment penalty may be charged as known to the creditor at the time the disclosures are provided.

37(b)(2) Interest rate.

1. Interest rate at consummation not known. Where the interest rate that will apply at consummation is not known at the time the creditor must deliver the disclosures required by § 1026.19(e), § 1026.37(b)(2) requires disclosure of the fully-indexed rate, defined as the index plus the margin at consummation. Although § 1026.37(b)(2) refers to the index plus margin “at consummation,” if the index value that will be in effect at consummation is unknown at the time the disclosures are provided under § 1026.19(e)(1)(iii), i.e., within three business days after receipt of a consumer's application, the fully-indexed rate disclosed under § 1026.37(b)(2) may be based on the index in effect at the time the disclosure is delivered. The index in effect at consummation (or the time the disclosure is delivered under § 1026.19(e)) need not be used if the contract provides for a delay in the implementation of changes in an index value. For example, if the contract specifies that rate changes are based on the index value in effect 45 days before the change date, creditors may use any index value in effect during the 45 days before consummation (or any earlier date of disclosure) in calculating the fully-indexed rate to be disclosed. See comment app. D-7.iii for an explanation of the disclosure of the permanent financing interest rate for a construction-permanent loan.

37(b)(3) Principal and interest payment.

1. Frequency of principal and interest payment. Pursuant to § 1026.37(o)(5)(i), if the contract provides for a unit-period, as defined in appendix J to this part, of a month, such as a monthly payment schedule, the payment disclosed under § 1026.37(b)(3) should be labeled “Monthly Principal & Interest.” If the contract requires bi-weekly payments of principal or interest, the payment should be labeled “Bi-Weekly Principal & Interest.” If a creditor voluntarily permits a payment schedule not provided for in the contract, such as an informal principal-reduction arrangement, the disclosure should reflect only the payment frequency provided for in the contract. See § 1026.17(c)(1).

2. Initial periodic payment if not known. Under § 1026.37(b)(3), the initial periodic payment amount that will be due under the terms of the legal obligation must be disclosed. If the initial periodic payment is not known because it will be based on an interest rate at consummation that is not known at the time the disclosures required by § 1026.19(e) must be provided, for example, if it is based on an external index that may fluctuate before consummation, § 1026.37(b)(3) requires that the disclosure be based on the fully-indexed rate disclosed under § 1026.37(b)(2). See comment 37(b)(2)-1 for guidance regarding calculating the fully-indexed rate.

37(b)(4) Prepayment penalty.

1. Transaction includes a prepayment penalty. Section 1026.37(b)(4) requires disclosure of a statement of whether the transaction includes a prepayment penalty. If the transaction includes a prepayment penalty, § 1026.37(b)(7) sets forth the information that must be disclosed under § 1026.37(b)(4) ( i.e., the maximum amount of the prepayment penalty that may be imposed under the terms of the loan contract and the date on which the penalty will no longer be imposed). For an example of such disclosure, see form H-24 of appendix H to this part. The disclosure under § 1026.37(b)(4) applies to transactions where the terms of the loan contract provide for a prepayment penalty, even though the creditor does not know at the time of the disclosure whether the consumer will, in fact, make a payment to the creditor that would cause imposition of the penalty. For example, if the monthly interest accrual amortization method described in comment 37(b)(4)-2.i is used such that interest is assessed on the balance for a full month even if the consumer makes a full prepayment before the end of the month, the transaction includes a prepayment penalty that must be disclosed pursuant to § 1026.37(b)(4).

2. Examples of prepayment penalties. For purposes of § 1026.37(b)(4), the following are examples of prepayment penalties:

i. A charge determined by treating the loan balance as outstanding for a period of time after prepayment in full and applying the interest rate to such “balance,” even if the charge results from interest accrual amortization used for other payments in the transaction under the terms of the loan contract. “Interest accrual amortization” refers to the method by which the amount of interest due for each period ( e.g., month) in a transaction's term is determined. For example, “monthly interest accrual amortization” treats each payment as made on the scheduled, monthly due date even if it is actually paid early or late (until the expiration of any grace period). Thus, under the terms of a loan contract providing for monthly interest accrual amortization, if the amount of interest due on May 1 for the preceding month of April is $3,000, the loan contract will require payment of $3,000 in interest for the month of April whether the payment is made on April 20, on May 1, or on May 10. In this example, if the consumer prepays the loan in full on April 20 and if the accrued interest as of that date is $2,000, then assessment of a charge of $3,000 constitutes a prepayment penalty of $1,000 because the amount of interest actually earned through April 20 is only $2,000.

ii. A fee, such as an origination or other loan closing cost, that is waived by the creditor on the condition that the consumer does not prepay the loan. See comment 37(b)(4)-3.iii below for additional guidance regarding waived bona fide third-party charges imposed by the creditor if the consumer pays all of a covered transaction's principal before the date on which the principal is due sooner than 36 months after consummation.

iii. A minimum finance charge in a simple interest transaction.

iv. Computing a refund of unearned interest by a method that is less favorable to the consumer than the actuarial method, as defined by section 933(d) of the Housing and Community Development Act of 1992, 15 U.S.C. 1615(d). For purposes of computing a refund of unearned interest, if using the actuarial method defined by applicable State law results in a refund that is greater than the refund calculated by using the method described in section 933(d) of the Housing and Community Development Act of 1992, creditors should use the State law definition in determining if a refund is a prepayment penalty.

3. Fees that are not prepayment penalties. For purposes of § 1026.37(b)(4), fees that are not prepayment penalties include, for example:

i. Fees imposed for preparing and providing documents when a loan is paid in full, if such fees are imposed whether or not the loan is prepaid. Examples include a loan payoff statement, a reconveyance document, or another document releasing the creditor's security interest in the dwelling that secures the loan.

ii. Loan guarantee fees.

iii. A waived bona fide third-party charge imposed by the creditor if the consumer pays all of a covered transaction's principal before the date on which the principal is due sooner than 36 months after consummation. For example, assume that at consummation, the creditor waives $3,000 in closing costs to cover bona fide third-party charges but the terms of the loan agreement provide that the creditor may recoup the $3,000 in waived charges if the consumer repays the entire loan balance sooner than 36 months after consummation. The $3,000 charge is not a prepayment penalty. In contrast, for example, assume that at consummation, the creditor waives $3,000 in closing costs to cover bona fide third-party charges but the terms of the loan agreement provide that the creditor may recoup $4,500 in part to recoup waived charges, if the consumer repays the entire loan balance sooner than 36 months after consummation. The $3,000 that the creditor may impose to cover the waived bona fide third-party charges is not a prepayment penalty, but the additional $1,500 charge is a prepayment penalty and must be disclosed pursuant to § 1026.37(b)(4).

4. Rebate of finance charge. For an obligation that includes a finance charge that does not take into account each reduction in the principal balance of the obligation, the disclosure under § 1026.37(b)(4) reflects whether or not the consumer is entitled to a rebate of any finance charge if the obligation is prepaid in full or part. Finance charges that do not take into account each reduction in the principal balance of an obligation may include precomputed finance charges. If any portion of an unearned precomputed finance charge will not be provided as a rebate upon full prepayment, the disclosure required by § 1026.37(b)(4) will be an affirmative answer, indicate the maximum amount of such precomputed finance charge that may not be provided as a rebate to the consumer upon any prepayment, and state when the period during which a full rebate would not be provided terminates, as required by § 1026.37(b)(7). If, instead, there will be a full rebate of the precomputed finance charge and no other prepayment penalty imposed on the consumer, to comply with the requirements of § 1026.37(b)(4) and (7), the creditor states a negative answer only. If the transaction involves both a precomputed finance charge and a finance charge computed by application of a rate to an unpaid balance, disclosure about both the entitlement to any rebate of the finance charge upon prepayment and any other prepayment penalty are made as one disclosure under § 1026.37(b)(4), stating one affirmative or negative answer and an aggregated amount and time period for the information required by § 1026.37(b)(7). For example, if in such a transaction, a portion of the precomputed finance charge will not be provided as a rebate and the loan contract also provides for a prepayment penalty based on the amount prepaid, both disclosures are made under § 1026.37(b)(4) as one aggregate amount, stating the maximum amount and time period under § 1026.37(b)(7). If the transaction instead provides a rebate of the precomputed finance charge upon prepayment, but imposes a prepayment penalty based on the amount prepaid, to comply with § 1026.37(b)(4), the creditor states an affirmative answer and the information about the prepayment penalty, as required by § 1026.37(b)(7). For further guidance and examples of these types of charges, see comment 18(k)(2)-1. For analogous guidance, see comment 18(k)-2. For further guidance on prepaid finance charges generally, see comment 18(k)-3.

5. Additional guidance. For additional guidance generally on disclosure of prepayment penalties, see comment 18(k)-1.

37(b)(5) Balloon payment.

1. Regular periodic payment. If a payment is not itself a regular periodic payment and is more than two times any one regular periodic payment during the loan term, then it is disclosed as a balloon payment under § 1026.37(b)(5). The regular periodic payments used to determine whether a payment is a balloon payment under § 1026.37(b)(5) are the payments of principal and interest (or interest only, depending on the loan features) specified under the terms of the loan contract that are due from the consumer for two or more unit-periods in succession. All regular periodic payments during the loan term are used to determine whether a particular payment is a balloon payment, regardless of whether the regular periodic payments have changed during the loan term due to rate adjustments or other payment changes permitted or required under the loan contract.

i. For example, assume that, under a 15-year step rate mortgage, the loan contract provides for scheduled monthly payments of $300 each during the years one through three and scheduled monthly payments of $700 each during years four through 15. If an irregular payment of $1,000 is scheduled during the final month of year 15, that payment is disclosed as a balloon payment under § 1026.37(b)(5), because it is more than two times the regular periodic payment amount of $300 during years one through three. This is the case even though the irregular payment is not more than two times the regular periodic payment of $700 per month during years four through fifteen. The $700 monthly payments during years four through fifteen are not balloon payments even though they are more than two times the regular periodic payments during years one through three, because they are regular periodic payments.

ii. If the loan has an adjustable rate under which the regular periodic payments may increase after consummation, but the amounts of such payment increases (if any) are unknown at the time of consummation, then the regular periodic payments are based on the fully-indexed rate, except as otherwise determined by any premium or discounted rates, the application of any interest rate adjustment caps, or any other known, scheduled rates under the terms specified in the loan contract. For analogous guidance, see comments 17(c)(1)-8 and -10. Similarly, if a loan has an adjustable interest rate which does not adjust the regular periodic payment but would, if the rate increased, increase only the final payment, the amount of the final payment for purposes of the balloon payment determination is based on the fully-indexed rate, except as otherwise determined by any premium or discounted rate caps, or any other known, scheduled rates under the terms specified in the loan contract. For example, assume that, under a 30-year adjustable rate mortgage, (1) the loan contract requires monthly payments of $300 during years one through five, (2) the loan contract permits interest rate increases every three years starting in the sixth year up to the fully-indexed rate, subject to caps on interest rate adjustments specified in the loan contract, (3) based on the application of the interest rate adjustment caps, the interest rate may increase to the fully-indexed rate starting in year nine, and (4) the monthly payment based on the fully-indexed rate is $700. The regular periodic payments during years one through five are $300 per month, because they are known and scheduled. The regular periodic payments during years six through eight are up to $700 per month, based on the fully-indexed rate but subject to the application of interest rate adjustment caps specified under the loan contract. The regular periodic payments during years nine through thirty are $700, based on the fully-indexed rate. Therefore, if an irregular payment of $1,000 is scheduled during the final month of year 30, that payment is disclosed as a balloon payment under § 1026.37(b)(5), because it is more than two times the regular periodic payment amount of $300 during years one through five. This is the case even though the irregular payment is not more than two times the regular periodic payment during years nine through thirty ( i.e., based on the fully-indexed rate). However, the regular periodic payments during years six through thirty themselves are not balloon payments, even though they may be more than two times the regular periodic payments during years one through five.

iii. For a loan with a negative amortization feature, the regular periodic payment does not take into account the possibility that the consumer may exercise an option to make a payment greater than the scheduled periodic payment specified under the terms of the loan contract, if any.

iv. A final payment that differs from other regular periodic payments because of rounding to account for payment amounts including fractions of cents is still a regular periodic payment and need not be disclosed as a balloon payment under § 1026.37(b)(5).

v. The disclosure of balloon payments in the “Projected Payments” table under § 1026.37(c) is governed by that section and its commentary, rather than § 1026.37(b)(5), except that the determination, as a threshold matter, of whether a payment disclosed under § 1026.37(c) is a balloon payment is made in accordance with § 1026.37(b)(5) and its commentary.

2. Single and double payment transactions. The definition of a “balloon payment” under § 1026.37(b)(5) includes the payments under transactions that require only one or two payments during the loan term, even though a single payment transaction does not require regular periodic payments, and a transaction with only two scheduled payments during the loan term may not require regular periodic payments.

37(b)(6) Adjustments after consummation.

1. Periods not in whole years. For guidance on how to disclose increases after consummation that occur after a number of months less than 24 but that do not equate to a number of whole years or within a number of days less than a week, see the guidance provided in comment 37(a)(10)-3. For increases that occur after more than 24 months, see the guidance provided in comment 37(b)(8)-1.

37(b)(6)(i) Adjustment in loan amount.

1. Additional information regarding adjustment in loan amount. A creditor complies with the requirement under § 1026.37(b)(6)(i) to disclose additional information indicating whether the maximum principal balance is potential or is scheduled to occur under the terms of the legal obligation by using the phrase “Can go as high as” or “Goes as high as,” respectively. A creditor complies with the requirement under § 1026.37(b)(6)(i) to disclose additional information indicating the due date of the last payment that may cause the principal balance to increase by using the phrase “Increases until.” See form H-24 of appendix H to this part for the required format of such phrases, which is required for federally related mortgage loans under § 1026.37(o)(3).

37(b)(6)(ii) Adjustment in interest rate.

1. Additional information regarding adjustment in interest rate. A creditor complies with the requirement under § 1026.37(b)(6)(ii) to disclose additional information indicating the frequency of adjustments to the interest rate and date when the interest rate may first adjust by using the phrases “Adjusts every” and “starting in.” A creditor complies with the requirement under § 1026.37(b)(6)(ii) to disclose additional information indicating the maximum interest rate, and the first date when the interest rate can reach the maximum interest rate using the phrase “Can go as high as” and then indicating the date at the end of that phrase or for a scheduled maximum interest rate under a step rate loan, “Goes as high as.” If the loan term may increase based on an interest rate adjustment, the disclosure shall indicate the maximum possible loan term using the phrase “Can increase loan term to.” See form H-24 of appendix H to this part for the required format of such phrases, which is required for federally related mortgage loans under § 1026.37(o)(3).

2. Interest rates that adjust at multiple intervals. If the terms of the legal obligation provide for more than one adjustment period, § 1026.37(b)(6)(ii) requires disclosure of only the frequency of the first interest rate adjustment. For example, if the interest rate is fixed for five years, then adjusts every two years starting in year six, then adjusts every year starting in year 10, the disclosure required is “Adjusts every 2 years starting in year 6.”

37(b)(6)(iii) Increase in periodic payment.

1. Additional information regarding increase in periodic payment. A creditor complies with the requirement under § 1026.37(b)(6)(iii) to disclose additional information indicating the scheduled frequency of adjustments to the periodic principal and interest payment by using the phrases “Adjusts every” and “starting in.” A creditor complies with the requirement under § 1026.37(b)(6)(iii) to disclose additional information indicating the maximum possible periodic principal and interest payment, and the date when the periodic principal and interest payment may first equal the maximum principal and interest payment by using the phrase “Can go as high as” and then indicating the date at the end of that phrase or, for a scheduled maximum amount, such as under a step payment loan, “Goes as high as.” A creditor complies with the requirement under § 1026.37(b)(6)(iii) to indicate that there is a period during which only interest is required to be paid and the due date of the last periodic payment of such period using the phrase “Includes only interest and no principal until.” See form H-24 of appendix H to this part for the required format of such phrases, which is required for federally related mortgage loans under § 1026.37(o)(3). See comment app. D-7.iv for an explanation of the disclosure of an increase in the periodic payment for a construction or construction-permanent loan.

2. Periodic principal and interest payments that adjust at multiple intervals. If there are multiple periods of adjustment under the terms of the legal obligation, § 1026.37(b)(6)(iii) requires disclosure of the frequency of only the first adjustment to the periodic principal and interest payment, regardless of the basis for the adjustment. Accordingly, where the periodic principal and interest payment may change because of more than one factor and such adjustments are on different schedules, the frequency disclosed is the adjustment of whichever factor adjusts first. For example, where the interest rate for a transaction is fixed until year six and then adjusts every three years but the transaction also has a negative amortization feature that ends in year seven, § 1026.37(b)(6)(iii) requires disclosure that the interest rate will adjust every three years starting in year six because the periodic principal and interest payment adjusts based on the interest rate before it adjusts based on the end of the negative amortization period.

37(b)(7) Details about prepayment penalty and balloon payment.

Paragraph 37(b)(7)(i)..

1. Maximum prepayment penalty. Section 1026.37(b)(7)(i) requires disclosure of the maximum amount of the prepayment penalty that may be imposed under the terms of the legal obligation. The creditor complies with § 1026.37(b)(7)(i) when it assumes that the consumer prepays at a time when the prepayment penalty may be charged and that the consumer makes all payments prior to the prepayment on a timely basis and in the amount required by the terms of the legal obligation. The creditor must determine the maximum of each amount used in calculating the prepayment penalty. For example, if a transaction is fully amortizing and the prepayment penalty is two percent of the loan balance at the time of prepayment, the prepayment penalty amount should be determined by using the highest loan balance possible during the period in which the penalty may be imposed. If more than one type of prepayment penalty applies, the creditor must aggregate the maximum amount of each type of prepayment penalty in the maximum penalty disclosed.

2. Additional information regarding prepayment penalty. A creditor complies with the requirement under § 1026.37(b)(7)(i) to disclose additional information indicating the maximum amount of the prepayment penalty that may be imposed and the date when the period during which the penalty may be imposed terminates using the phrases “As high as” and “if you pay off the loan during.” See form H-24 of appendix H to this part for the required format of such phrases, which is required for federally related mortgage loans under § 1026.37(o)(3).

Paragraph 37(b)(7)(ii).

1. Additional information regarding balloon payment. A creditor complies with the requirement under § 1026.37(b)(7)(ii) to disclose additional information indicating the maximum amount of the balloon payment and the due date of such payment using the phrases “You will have to pay” and “at the end of.” See form H-24 of appendix H to this part for the required format of such phrases, which is required for federally related mortgage loans under § 1026.37(o)(3). If the transaction includes more than one balloon payment, a creditor complies with § 1026.37(b)(7)(ii) by disclosing the highest of the balloon payments and the due date of that payment.

37(b)(8) Timing.

1. Whole years. For adjustments that occur after a period of whole years, the timing of information required by § 1026.37(b)(8) starts with year number “1,” counting from the date that interest for the first scheduled periodic payment begins to accrue for § 1026.37(b)(8)(i), or from the due date of the first periodic payment for § 1026.37(b)(8)(ii), or from the date of consummation for § 1026.37(b)(8)(iii). For example, an interest rate that is fixed for five years and can first adjust at the beginning of the 61st month from the date that interest for the regularly scheduled periodic payment began to accrue would be disclosed as beginning to adjust in “year 6.” A monthly periodic payment that adjusts starting with the 61st scheduled payment likewise would be disclosed as adjusting in “year 6.”

2. Periods not in whole years. For adjustments that occur after a number of months less than 24 that do not equate to a number of whole years or within a number of days less than a week, see the guidance provided in comment 37(a)(10)-3.

37(c) Projected payments.

1. Definitions. For purposes of § 1026.37(c), the terms “adjustable rate,” “fixed rate,” “negative amortization,” and “interest only” have the meanings in § 1026.37(a)(10).

2. Construction loans. See comment app. D-7.v for an explanation of the projected payments disclosure for a construction or construction-permanent loan.

37(c)(1) Periodic payment or range of payments.

Paragraph 37(c)(1)(i)..

1. Periodic payments. For purposes of § 1026.37(c)(1)(i), the periodic payment is the regularly scheduled payment of principal and interest, mortgage insurance premiums, and escrow payments described in § 1026.37(c)(2) without regard to any final payment that differs from other payments because of rounding to account for payment amounts including fractions of cents.

2. Initial periodic payment or range of payments. Section 1026.37(c)(1)(i) requires the creditor to disclose the initial periodic payment or range of payments. The disclosure required is of the actual periodic payment or range of payments that corresponds to the interest rate that will apply at consummation, including any initial discounted or premium interest rate. For examples of discounted and premium rate transactions, see comment 17(c)(1)-10.v. For guidance regarding whether the disclosure should reflect a buydown, see comments 17(c)(1)-3 through -5. If the initial periodic payment or range of payments may vary based on an adjustment to an index value that applies at consummation, § 1026.37(c)(1)(i) requires that the disclosure of the initial periodic payment or range of payments be based on the fully-indexed rate disclosed under § 1026.37(b)(2). See comment 37(b)(2)-1 for guidance regarding calculating the fully-indexed rate.

Paragraph 37(c)(1)(i)(A).

1. Periodic principal and interest payments. For purposes of § 1026.37(c)(1)(i)(A), periodic principal and interest payments may change when the interest rate, applicable interest rate caps, required periodic principal and interest payments, or ranges of such payments may change. Minor payment variations resulting solely from the fact that months have different numbers of days are not changes to periodic principal and interest payments.

2. Negative amortization. In a loan that contains a negative amortization feature, periodic principal and interest payments or the range of such payments may change for purposes of § 1026.37(c)(1)(i)(A) at the time the negative amortization period ends under the terms of the legal obligation, meaning the consumer must begin making payments that do not result in an increase of the principal balance. The occurrence of an event requiring disclosure of additional separate periodic payments or ranges of payments should be based on the assumption that the consumer will make payments as scheduled or, if applicable, elect to make the periodic payments that would extend the negative amortization period to the latest time permitted under the terms of the legal obligation. The occurrence of all subsequent events requiring disclosure of additional separate periodic payments or ranges of payments should be based on this assumption. The table required by § 1026.37(c) should also reflect any balloon payment that would result from such scheduled payments or election. See § 1026.37(c)(1)(ii)(A) for special rules regarding disclosure of balloon payments.

3. Interest only. In a loan that contains an interest only feature, periodic principal and interest payments may change for purposes of § 1026.37(c)(1)(i)(A) when the interest only period ends, meaning the consumer must begin making payments that do not defer repayment of principal.

Paragraph 37(c)(1)(i)(B).

1. Balloon payment. For purposes of § 1026.37(c)(1)(i)(B), whether a balloon payment occurs is determined pursuant to § 1026.37(b)(5) and its commentary. For guidance on the amount of a balloon payment disclosed on the table required by § 1026.37(c), see comment 37(c)(2)(i)-3.

Paragraph 37(c)(1)(i)(C).

1. General. “Mortgage insurance or any functional equivalent” means the amounts identified in § 1026.4(b)(5). For purposes of § 1026.37(c), “mortgage insurance or any functional equivalent” includes any mortgage guarantee that provides coverage similar to mortgage insurance (such as a United States Department of Veterans Affairs or United States Department of Agriculture guarantee), even if not technically considered insurance under State or other applicable law. The fees for such a guarantee are included in “mortgage insurance premiums.”

2. Calculation of mortgage insurance termination. For purposes of § 1026.37(c)(1)(i)(C), mortgage insurance premiums should be calculated based on the declining principal balance that will occur as a result of changes to the interest rate and payment amounts, applying the interest rates applicable to the transaction. Such calculation should take into account any initial discounted or premium interest rate. For example, for an adjustable rate transaction that has a discounted interest rate during an initial five-year period, the creditor makes the calculation using a composite rate based on the rate in effect during the initial five-year period and, thereafter, the fully-indexed rate, unless otherwise required by applicable law. For guidance on calculation of the amount of mortgage insurance premiums to disclose on the table required by § 1026.37(c), see § 1026.37(c)(2)(ii) and its commentary. See comment 37(b)(2)-1 for guidance regarding calculating the fully-indexed rate.

3. Disclosure of mortgage insurance termination. The table required by § 1026.37(c) should reflect the consumer's mortgage insurance premiums until the date on which the creditor must automatically terminate coverage under applicable law, even though the consumer may have a right to request that the insurance be cancelled earlier. Unlike termination of mortgage insurance, a subsequent decline in the consumer's mortgage insurance premiums is not, by itself, an event that requires the disclosure of additional separate periodic payments or ranges of payments in the table required by § 1026.37(c). For example, some mortgage insurance programs annually adjust premiums based on the declining loan balance. Such annual adjustment to the amount of premiums would not require a separate disclosure of a periodic payment or range payments.

Paragraph 37(c)(1)(i)(D).

1. Anniversary of the due date of initial periodic payment. Section 1026.37(c)(1)(i)(D) provides that the anniversary of the due date of the initial periodic payment or range of payments that immediately follows the occurrence of multiple events described in § 1026.37(c)(1)(i)(A) during a single year is an event that requires disclosure of additional periodic payments or ranges of payments. Section 1026.37(c)(1)(i)(A) provides that a potential change in the periodic principal and interest payment is an event requiring disclosure of additional separate periodic payments. See comment 37(c)(1)(iii)(B)-1 for an example of the application of § 1026.37(c)(1)(i)(D).

Paragraph 37(c)(1)(ii).

Paragraph 37(c)(1)(ii)(a)..

1. Special rule regarding balloon payments that are final payments. Section 1026.37(c)(1)(ii)(A) is an exception to the general rule in § 1026.37(c)(1)(ii), and requires that a balloon payment that is scheduled as a final payment under the terms of the legal obligation is always disclosed as a separate periodic payment or range of payments, in which case the creditor discloses as a single range of payments all events requiring disclosure of additional separate periodic payments or ranges of payments described in § 1026.37(c)(1)(i)(A) through (D), other than the final balloon payment, occurring after the second separate periodic payment or range of payments disclosed. Balloon payments that are not scheduled as final payments under the terms of the legal obligation, such as a balloon payment due at the scheduled recast of a loan that permits negative amortization, are disclosed pursuant to the general rule in § 1026.37(c)(1)(ii). A balloon payment that is a final payment is disclosed as a single payment, and not combined with other changes to periodic principal and interest payments and disclosed as a range.

2. Example. Assume a loan with a term of seven years, where the interest rate adjusts each year for the first three years and is fixed thereafter, that provides for a balloon payment as the final payment, where no mortgage insurance is required, and no escrow account will be established for the payment of charges described in § 1026.37(c)(4)(ii). The creditor discloses on the table required by § 1026.37(c) in the first column the initial periodic payment or range of payments, in the second column the periodic payment or range of payments that would apply after the first interest rate adjustment, in the third column the periodic payments or ranges of payments that would apply after the second interest rate adjustment until the final balloon payment (disclosed as a single range of payments), and in the fourth column the final balloon payment. Although the balloon payment that is scheduled as the final payment under the terms of the legal obligation occurs after the third separate periodic payment or range of payments, the creditor discloses the final balloon payment as a separate event requiring disclosure of additional periodic payments or range of payments due to the special rule in § 1026.37(c)(1)(ii)(A).

Paragraph 37(c)(1)(ii)(B).

1. Special rule regarding disclosure of the automatic termination of mortgage insurance. Section 1026.37(c)(1)(ii)(B) is an exception to the general rule in § 1026.37(c)(1)(ii), and requires that the automatic termination of mortgage insurance or any functional equivalent under applicable law is disclosed as a separate periodic payment or range of payments only if the total number of separate periodic payments or ranges of payments otherwise disclosed does not exceed three. This means that the automatic termination of mortgage insurance or any functional equivalent under applicable law is disclosed as its own event only if there is a column in which to disclose it, i.e., there are only three other separate periodic payments or ranges of payments that are required to be disclosed. Where the automatic termination of mortgage insurance or any functional equivalent under applicable law is not disclosed as a separate periodic payment or range of payments, the absence of a required mortgage insurance payment is disclosed with the next disclosed event requiring disclosure of additional separate periodic payments or ranges of payments, as applicable.

2. Examples of special rule regarding disclosure of the automatic termination of mortgage insurance. i. Assume a step-rate loan with a 30-year term with an introductory interest rate that lasts for five years, a different interest rate that applies for the next five-year period, a final interest rate adjustment after 10 years, where mortgage insurance would terminate for purposes of § 1026.37(c)(1)(i)(C) in the third year, and where no escrow account would be established for the payment of charges described in § 1026.37(c)(4)(ii). The creditor would disclose on the table required by § 1026.37(c) the initial periodic payment for years one through three (reflecting the principal and interest payment corresponding to the introductory interest rate and payments for mortgage insurance premiums), an additional separate periodic payment for years four and five (reflecting the principal and interest payment corresponding to the introductory rate and no payments for mortgage insurance premiums), an additional separate periodic payment or range of payments for years six through 10 (reflecting the principal and interest payment corresponding to the interest rate that would apply after the introductory rate), and an additional separate periodic payment or range of payments for years 11 through 30 (reflecting the principal and interest payment corresponding to the interest rate that would apply after the second interest rate adjustment until the end of the loan term). In this example, the automatic termination of mortgage insurance would be separately disclosed on the table required by § 1026.37(c) because the total number of separate periodic payments or ranges of payments otherwise disclosed pursuant to § 1026.37(c)(1) does not exceed three.

ii. Assume the same loan as above, except that the terms of the legal obligation also provide for a third interest rate adjustment that would occur after 15 years. The creditor would disclose on the table required by § 1026.37(c) the initial periodic payment for years one through five (reflecting the principal and interest payment corresponding to the introductory interest rate and payments for mortgage insurance premiums), an additional separate periodic payment or range of payments for years six through 10 (reflecting the principal and interest payment corresponding to the interest rate that would apply after the first interest rate adjustment and no payments for mortgage insurance premiums), an additional separate periodic payment or range of payments for years 11 through 15 (reflecting the principal and interest payment corresponding to the interest rate that would apply after the second interest rate adjustment), and an additional separate periodic payment or range of payments for years 16 through 30 (reflecting the principal and interest payment corresponding to the interest rate that would apply after the third interest rate adjustment until the end of the loan term). In this example, the automatic termination of mortgage insurance would not be separately disclosed on the table required by § 1026.37(c) because the total number of separate periodic payments or ranges of payments otherwise disclosed pursuant to § 1026.37(c)(1) exceeds three. However, the creditor would disclose the termination of mortgage insurance beginning with the periodic payment or range of payments for years six through 10, which is the next disclosed event requiring disclosure of additional separate periodic payments or ranges of payments.

Paragraph 37(c)(1)(iii).

1. Ranges of payments. When a range of payments is required to be disclosed under § 1026.37(c)(1), § 1026.37(c)(1)(iii) requires the creditor to disclose the minimum and maximum amount for both the principal and interest payment under § 1026.37(c)(2)(i) and the total periodic payment under § 1026.37(c)(2)(iv). The amount required to be disclosed for mortgage insurance premiums pursuant to § 1026.37(c)(2)(ii) and the amount payable into an escrow account pursuant to § 1026.37(c)(2)(iii) shall not be disclosed as a range.

Paragraph 37(c)(1)(iii)(B).

1. Multiple events occurring in a single year. If multiple changes to periodic principal and interest payments would result in more than one separate periodic payment or range of payments in a single year, § 1026.37(c)(1)(iii)(B) requires the creditor to disclose the range of payments that would apply during the year in which the events occur. For example:

i. Assume a loan with a 30-year term with a payment that adjusts every month for the first 12 months and is fixed thereafter, where mortgage insurance is not required, and where no escrow account would be established for the payment of charges described in § 1026.37(c)(4)(ii). The creditor discloses as a single range of payments the initial periodic payment and the periodic payment that would apply after each payment adjustment during the first 12 months, which single range represents the minimum payment and maximum payment, respectively. Under § 1026.37(c)(1)(i)(D), the creditor also discloses, as an additional separate periodic payment or range of payments, the periodic principal and interest payment or range of payments that would apply after the payment becomes fixed.

ii. Assume instead a loan with a 30-year term with a payment that adjusts upward at three months and at six months and is fixed thereafter, where mortgage insurance is not required, and where no escrow account would be established for the payment of charges described in § 1026.37(c)(4)(ii). The creditor discloses as a single range of payments the initial periodic payment, the periodic payment that would apply after the payment adjustment that occurs at three months, and the periodic payment that would apply after the payment adjustment that occurs at six months, which single range represents the minimum payment and maximum payment, respectively, which would apply during the first year of the loan. Under § 1026.37(c)(1)(i)(D), the creditor also discloses as an additional separate periodic payment or range of payments, the principal and interest payment that would apply on the first anniversary of the due date of the initial periodic payment or range of payments, because that is the anniversary that immediately follows the occurrence of the multiple payments or ranges of payments that occurred during the first year of the loan.

iii. Assume that the same loan has a payment that, instead of becoming fixed after the adjustment at six months, adjusts once more at 18 months and becomes fixed thereafter. The creditor discloses the same single range of payments for year one. Under § 1026.37(c)(1)(i)(D), the creditor separately discloses the principal and interest payment that would apply on the first anniversary of the due date of the initial periodic payment in year two. Under § 1026.37(c)(1)(i)(A) and (c)(3)(ii), beginning in the next year in the sequence ( i.e., in year three), the creditor separately discloses the periodic payment that would apply after the payment adjustment that occurs at 18 months. See comment 37(c)(3)(ii)-1 regarding subheadings that state the years.

Paragraph 37(c)(1)(iii)(C).

1. Adjustable rate mortgages. For an adjustable rate loan, the periodic principal and interest payment at each time the interest rate may change will depend on the rate that applies at the time of the adjustment, which is not known at the time the disclosure is provided. As a result, the creditor discloses the minimum and maximum periodic principal and interest payment that could apply during each period disclosed pursuant to § 1026.37(c)(1) after the first period.

37(c)(2) Itemization.

Paragraph 37(c)(2)(i)..

1. General rule for adjustable rate loans. For an adjustable rate loan, in disclosing the maximum possible payment for principal and interest under § 1026.37(c), the creditor assumes that the interest rate will rise as rapidly as possible after consummation, taking into account the terms of the legal obligation, including any applicable caps on interest rate adjustments and lifetime interest rate cap. For a loan with no lifetime interest rate cap, the maximum rate is determined by reference to other applicable laws, such as State usury law. In disclosing the minimum payment for purposes of § 1026.37(c), the creditor assumes that the interest rate will decrease as rapidly as possible after consummation, taking into account any introductory rates, caps on interest rate adjustments, and lifetime interest rate floor. For an adjustable rate loan based on an index that has no lifetime interest rate floor, the minimum interest rate is equal to the margin.

2. Special rule for adjustable rate loans with negative amortization features. Section 1026.37(c)(2)(i)(B) provides a special rule for calculation of the maximum principal and interest payment in an adjustable rate loan that contains a negative amortization feature. That section provides that the maximum amounts payable for principal and interest after the negative amortization period ends are calculated using the maximum principal amount permitted under the terms of the legal obligation at the end of the negative amortization period. See section § 1026.37(c)(1)(i)(A) and associated commentary for guidance regarding when the negative amortization period ends for purposes of § 1026.37(c)(2). For example, if the maximum principal balance for the last payment in the negative amortization period is achieved at an interest rate that is not the maximum interest rate permitted under the terms of the legal obligation before the negative amortization period ends, future events requiring disclosure of additional, separate periodic payments or ranges of payments assume that the interest rate in effect at the end of the negative amortization period was such interest rate, and not the maximum possible interest rate. After the end of the negative amortization period, the general rule under § 1026.37(c)(2)(i)(A) regarding assumptions of interest rate changes for the maximum principal and interest payment to be disclosed applies from such interest rate. The minimum payment in an adjustable rate loan that contains a negative amortization feature is determined pursuant to the general rule under § 1026.37(c)(2)(i)(A).

3. Disclosure of balloon payment amounts. Although the existence of a balloon payment is determined pursuant to § 1026.37(b)(5) and its commentary ( see comment 37(c)(1)(i)(B)-1), balloon payment amounts to be disclosed under § 1026.37(c) are calculated in the same manner as periodic principal and interest payments under § 1026.37(c)(2)(i). For example, for a balloon payment amount that can change depending on previous interest rate adjustments that are based on the value of an index at the time of the adjustment, the balloon payment amounts are calculated using the assumptions for minimum and maximum interest rates described in § 1026.37(c)(2)(i) and its commentary, and should be disclosed as a range of payments.

Paragraph 37(c)(2)(ii).

1. Mortgage insurance disclosure. Mortgage insurance premiums should be reflected on the disclosure required by § 1026.37(c) even if no escrow account is established for the payment of mortgage insurance premiums. If the consumer is not required to purchase mortgage insurance or any functional equivalent, the creditor discloses the mortgage insurance premium amount as “0.” If the creditor is disclosing the automatic termination or the absence of mortgage insurance or any functional equivalent under applicable law or the absence of mortgage insurance or any functional equivalent after coverage has terminated, the creditor discloses the mortgage insurance premium as “-.”

2. Relationship to principal and interest disclosure. The creditor discloses mortgage insurance premiums pursuant to § 1026.37(c)(2)(ii) on the same periodic basis that payments for principal and interest are disclosed pursuant to § 1026.37(c)(2)(i), even if mortgage insurance premiums are actually paid on some other periodic basis.

Paragraph 37(c)(2)(iii).

1. Escrow disclosure. The disclosure described in § 1026.37(c)(2)(iii) is required only if the creditor will establish an escrow account for the payment of some or all of the charges described in § 1026.37(c)(4)(ii). If no escrow account for the payment of some or all such charges will be established, the creditor discloses the escrow amount as “0.” If an escrow account is established for the payment of amounts described in § 1026.37(c)(4)(ii), but no escrow payment is required with a particular periodic payment (such as with a final balloon payment) or range of payments, the escrow payment should be disclosed as “ - .”

37(c)(3) Subheadings.

Paragraph 37(c)(3)(ii)..

1. Years. Section 1026.37(c)(3)(ii) requires that each separate periodic payment or range of payments be disclosed under a subheading that states the years during which that payment or range of payments will apply and that such subheadings be stated in a sequence of whole years from the due date of the initial periodic payment. Therefore, for purposes of § 1026.37(c), “year” is defined as the twelve-month interval beginning on the due date of the initial periodic payment, and the next whole year begins each anniversary thereafter. If an event requiring the disclosure of an additional separate periodic payment or range of payments occurs on a date other than the anniversary of the due date of the initial periodic payment, and no other events occur during that single year requiring disclosure of multiple events under § 1026.37(c)(1)(iii)(B), such event is disclosed beginning in the next year in the sequence, because the separate periodic payment or range of payments that applied during the previous year will also apply during a portion of that year. For example:

i. Assume a fixed rate loan with a term of 124 months (10 years, four months). The creditor would label the disclosure of periodic payments as “Years 1-11.”

ii. Assume a loan with a 30-year term that does not require mortgage insurance and requires interest only payments for the first 60 months from the due date of the initial periodic payment, then requires fixed, fully amortizing payments of principal and interest beginning at the 61st month for the duration of the loan, the creditor would label the first disclosure of periodic payments as “Years 1-5” (including the term “only interest” pursuant to § 1026.37(c)(2)(i)) and the second disclosure of periodic payments or range of payments as “Years 6-30.” If that loan requires interest only payments for the first 54 months from the due date of the initial periodic payment, then requires fixed, fully amortizing payments of principal and interest for the duration of the loan, because the change in the periodic payment occurs on a date other than the anniversary of the due date of the initial periodic payment and the previous payment applies during that year, the creditor would likewise label the first disclosure of periodic payments as “Years 1-5” (including the term “only interest” pursuant to § 1026.37(c)(2)(i)) and the second disclosure of periodic payments or range of payments as “Years 6-30.” If the loan that requires interest only payments for the first 54 months also requires mortgage insurance that would automatically terminate under applicable law after the 100th month from the due date of the initial periodic payment, the creditor would label the first disclosure of periodic payments as “Years 1-5” (including the term “only interest” pursuant to § 1026.37(c)(2)(i)), the second disclosure of periodic payments or range of payments as “Years 6-9,” and the third disclosure of periodic payments or range of payments as “Years 10-30.”

2. Loans with variable terms. If the loan term may increase based on an adjustment of the interest rate, the creditor must disclose the maximum loan term possible under the legal obligation. To calculate the maximum loan term, the creditor assumes that the interest rate rises as rapidly as possible, taking into account the terms of the legal obligation, including any applicable caps on interest rate adjustments and lifetime interest rate cap. See comment 37(a)(8)-2.

37(c)(4) Taxes, insurance, and assessments.

Paragraph 37(c)(4)(ii)..

1. Definition of taxes, insurance, and assessments. See the commentary under § 1026.43(b)(8) for guidance on the charges that are included in taxes, insurance, and assessments for purposes of § 1026.37(c)(4)(ii), except that the portion of that commentary related to amounts identified in § 1026.4(b)(5) is inapplicable to the disclosure required by § 1026.37(c)(4)(ii).

Paragraph 37(c)(4)(iv).

1. Description of other amounts. Section 1026.37(c)(4)(iv) requires the creditor to disclose a statement of whether the amount disclosed pursuant to § 1026.37(c)(4)(ii) includes payments for property taxes, amounts identified in § 1026.4(b)(8) (homeowner's insurance premiums), and other amounts described in § 1026.37(c)(4)(ii), along with a description of any such other amounts. If the amount disclosed pursuant to § 1026.37(c)(4)(ii) requires the creditor to disclose a description of more than one amount other than amounts for payment of property taxes or homeowner's insurance premiums, the creditor may disclose a descriptive statement of one such amount along with an indication that additional amounts are also included, such as by using the phrase “and additional costs.”

2. Amounts paid by the creditor using escrow account funds. Section 1026.37(c)(4)(iv) requires the creditor to disclose an indication of whether the amounts disclosed under § 1026.37(c)(4)(ii) will be paid by the creditor using escrow account funds. If only a portion of the amounts disclosed under § 1026.37(c)(4)(ii), including, without limitation, property taxes, homeowner's insurance, and assessments, will be paid by the creditor using escrow account funds, the creditor may indicate that only a portion of the amounts disclosed will be paid using escrow account funds, such as by using the word “some.”

37(d) Costs at closing.

37(d)(2) optional alternative table for transactions without a seller or for simultaneous subordinate financing..

1. Optional use. The optional alternative disclosure of the estimated cash to close provided for in § 1026.37(d)(2) may be used by a creditor only in a transaction without a seller or a simultaneous subordinate financing transaction. In a purchase transaction, the optional alternative disclosure may be used for the simultaneous subordinate financing Loan Estimate only if the first-lien Closing Disclosure will record the entirety of the seller's transaction. Creditors may only use this alternative estimated cash to close disclosure in conjunction with the alternative disclosure under § 1026.37(h)(2).

2. Method of indication. The indication of whether the estimated cash is either due from or payable to the consumer can be made by the use of check boxes as shown in form H-24(D) of appendix H to this part.

37(f) Closing cost details; loan costs.

1. General description. The items disclosed under § 1026.37(f) include services that the creditor or mortgage broker require for consummation, such as underwriting, appraisal, and title services.

2. Mortgage broker. Commentary under § 1026.19(e)(1)(ii) discusses the requirements and responsibilities of mortgage brokers that provide the disclosures required by § 1026.19(e), which include the disclosures set forth in § 1026.37(f).

3. Construction loan inspection and handling fees. Inspection and handling fees for the staged disbursement of construction loan proceeds, including draw fees, are loan costs associated with the transaction for purposes of § 1026.37(f). If inspection and handling fees are collected at or before consummation, the total of such fees is disclosed in the loan costs table. If inspection and handling fees will be collected after consummation, the total of such fees is disclosed in a separate addendum and the fees are not counted for purposes of the calculating cash to close table. See comment 37(f)(6)-3 for a description of an addendum used to disclose inspection and handling fees that will be collected after consummation. See also comments 38(f)-2 and app. D-7.vii. If the number of inspections and disbursements is not known at the time the disclosures are provided, the creditor discloses the fees that will be collected based on the best information reasonably available to the creditor at the time the disclosure is provided. See comment 19(e)(1)(i)-1. See § 1026.17(e) and its commentary for an explanation of the effect of subsequent events that cause inaccuracies in disclosures.

37(f)(1) Origination charges.

1. Origination charges. Charges included under the subheading “Origination Charges” pursuant to § 1026.37(f)(1) are those charges paid by the consumer to each creditor and loan originator for originating and extending the credit, regardless of how such fees are denominated. In accordance with § 1026.37(o)(4), the dollar amounts disclosed under § 1026.37(f)(1) must be rounded to the nearest whole dollar and the percentage amounts must be disclosed as an exact number up to two or three decimal places, except that decimal places shall not be disclosed if the percentage is a whole number. See comment 19(e)(3)(i)-3 for a discussion of when a fee is considered to be “paid to” a person. See § 1026.36(a) and associated commentary for a discussion of the meaning of “loan originator” in connection with limits on compensation in a consumer credit transaction secured by a dwelling.

2. Indirect loan originator compensation. Only charges paid directly by the consumer to compensate a loan originator are included in the amounts listed under § 1026.37(f)(1). Compensation of a loan originator paid indirectly by the creditor through the interest rate is not itemized on the Loan Estimate required by § 1026.19(e). However, pursuant to § 1026.38(f)(1), such compensation is itemized on the Closing Disclosure required by § 1026.19(f).

3. Description of charges. Other than for points charged in connection with the transaction to reduce the interest rate, for which specific language must be used, the creditor may use a general label that uses terminology that, under § 1026.37(f)(5), is consistent with § 1026.17(a)(1), clearly and conspicuously describes the service that is disclosed as an origination charge pursuant to § 1026.37(f)(1). Items that are listed under the subheading “Origination Charges” may include, for example, application fee, origination fee, underwriting fee, processing fee, verification fee, and rate-lock fee.

4. Points. If there are no points charged in connection with the transaction to reduce the interest rate, the creditor leaves blank the percentage of points used in the label and the dollar amount disclosed under § 1026.37(f)(1)(i).

5. Itemization. Creditors determine the level of itemization of “Origination Charges” that is appropriate under § 1026.37(f)(1) in relation to charges paid by the consumer to the creditor, subject to the limitations in § 1026.37(f)(1)(ii). For example, the following charges should be itemized separately: compensation paid directly by a consumer to a loan originator that is not also the creditor; or a charge imposed to pay for a loan level pricing adjustment assessed on the creditor, which the creditor passes onto the consumer as a charge at consummation and not as an adjustment to the interest rate.

37(f)(2) Services you cannot shop for.

1. Services disclosed. Items included under the subheading “Services You Cannot Shop For” pursuant to § 1026.37(f)(2) are for those services that the creditor requires in connection with the transaction that would be provided by persons other than the creditor or mortgage broker and for which the creditor does not permit the consumer to shop in accordance with § 1026.19(e)(1)(vi). Comment 19(e)(1)(vi)-1 clarifies that a consumer is not permitted to shop if the consumer must choose a provider from a list provided by the creditor. Comment 19(e)(3)(i)-1 addresses determining good faith in providing estimates under § 1026.19(e), including estimates for services for which the consumer cannot shop. Comments 19(e)(3)(iv)-1 through -3 discuss limits and requirements applicable to providing revised estimates for services for which the consumer cannot shop.

2. Examples of charges. Examples of the services and amounts to be disclosed pursuant to § 1026.37(f)(2) might include an appraisal fee, appraisal management company fee, credit report fee, flood determination fee, government funding fee, homeowner's association certification fee, lender's attorney fee, tax status research fee, third-party subordination fee, title - closing protection letter fee, title - lender's title insurance policy, and an upfront mortgage insurance fee, provided that the fee is charged at consummation and is not a prepayment of future premiums over a specific future time period or a payment into an escrow account. Government funding fees include a United States Department of Veterans Affairs or United States Department of Agriculture guarantee fee, or any other fee paid to a government entity as part of a governmental loan program, that is paid at consummation.

3. Title insurance services. The services required to be labeled beginning with “Title -” pursuant to § 1026.37(f)(2) or (3) are those required for the issuance of title insurance policies to the creditor in connection with the consummation of the transaction or for conducting the closing. These services may include, for example:

i. Examination and evaluation, based on relevant law and title insurance underwriting principles and guidelines, of the title evidence to determine the insurability of the title being examined and what items to include or exclude in any title commitment and policy to be issued;

ii. Preparation and issuance of the title commitment or other document that discloses the status of the title as it is proposed to be insured, identifies the conditions that must be met before the policy will be issued, and obligates the insurer to issue a policy of title insurance if such conditions are met;

iii. Resolution of underwriting issues and taking the steps needed to satisfy any conditions for the issuance of the policies;

iv. Preparation and issuance of the policy or policies of title insurance; and

v. Premiums for any title insurance coverage for the benefit of the creditor.

4. Lender's title insurance policy. Section 1026.37(f)(2) and (3) requires disclosure of the amount the consumer will pay for the lender's title insurance policy. However, an owner's title insurance policy that covers the consumer and is not required to be purchased by the creditor is only disclosed pursuant to § 1026.37(g). Accordingly, the creditor must quote the amount of the lender's title insurance coverage pursuant to § 1026.37(f)(2) or (3) as applicable based on the type of lender's title insurance policy required by its underwriting standards for that loan. The amount disclosed for the lender's title insurance policy pursuant to § 1026.37(f)(2) or (3) is the amount of the premium without any adjustment that might be made for the simultaneous purchase of an owner's title insurance policy. This amount may be disclosed as “Title - Premium for Lender's Coverage,” or in any similar manner that clearly indicates the amount of the premium disclosed pursuant to § 1026.37(f)(2) is for the lender's title insurance coverage. See comment 37(g)(4)-1 for a discussion of the disclosure of the premium for an owner's title insurance policy that covers the consumer.

37(f)(3) Services you can shop for.

1. Services disclosed. Items included under the subheading “Services You Can Shop For” pursuant to § 1026.37(f)(3) are for those services: That the creditor requires in connection with its decision to make the loan; that would be provided by persons other than the creditor or mortgage broker; and for which the creditor allows the consumer to shop in accordance with § 1026.19(e)(1)(vi). Comments 19(e)(3)(ii)-1 through -3, and -5 address the determination of good faith in providing estimates of charges for services for which the consumer can shop. Comment 19(e)(3)(iii)-2 discusses the determination of good faith when the consumer chooses a provider that is not on the list the creditor provides to the consumer when the consumer is permitted to shop consistent with § 1026.19(e)(1)(vi). Comments 19(e)(3)(iv)-1 through -3 discuss limits and requirements applicable to providing revised estimates for services for which the consumer can shop.

2. Example of charges. Examples of the services to be listed under this subheading pursuant to § 1026.37(f)(3) might include a pest inspection fee, survey fee, title - closing agent fee, and title - closing protection letter fee.

3. Title insurance. See comments 37(f)(2)-3 and -4 for guidance on services that are to be labeled beginning with “Title - ” and on calculating and labeling the amount disclosed for lender's title insurance pursuant to § 1026.37(f)(3). See comment 37(g)(4)-1 for a discussion of the disclosure of the premium for owner's title insurance coverage.

37(f)(5) Item descriptions and ordering.

1. Clear and conspicuous standard. Section 1026.37(f)(5) requires creditors to label the loan costs disclosed pursuant § 1026.37(f) using terminology that describes each item. A creditor complies with this requirement if it uses terminology that is clear and conspicuous, consistent with § 1026.17(a)(1), and describes the service or administrative function that the charge pays for in a manner that is reasonably understood by consumers within the space provided in form H-24 of appendix H to this part. For example, if a creditor imposes a fee on a consumer to cover the costs associated with underwriting the transaction, the creditor would comply with § 1026.37(f)(5) if it labeled the cost “Underwriting Fee.” A label that uses abbreviations or acronyms that are not reasonably understood by consumers would not comply with § 1026.37(f)(5).

37(f)(6) Use of addenda.

1. State law disclosures. If a creditor is required by State law to make additional disclosures that, pursuant to § 1026.37(f)(6)(i), cannot be included in the disclosures required under § 1026.37(f), the creditor may make those additional State law disclosures on a document whose pages are separate from, and are not presented as part of, the disclosures prescribed in § 1026.37, for example, as an addendum to the Loan Estimate. See comment 37(o)(1)-1.

2. Reference to addendum. If an addendum is used as permitted under § 1026.37(f)(6)(ii), an example of a label that complies with the requirement for an appropriate reference on the last line is: “See attached page for additional items you can shop for.”

3. Addendum for post-consummation inspection and handling fees. A creditor makes the disclosures required by § 1026.37(f) and comment 37(f)-3 for construction loan inspection and handling fees collected after consummation by disclosing the total of such fees under the heading “Inspection and Handling Fees Collected After Closing” in an addendum, which may be the addendum pursuant to § 1026.37(f)(6) or any other addendum or additional page under § 1026.37. See comment 37(o)(1)-1. For purposes of comment 38(f)-2, the addendum may be any addendum or additional page under § 1026.38. If the actual amount of such fees is not known at the time the disclosures are provided, the disclosures in the addendum are based upon the best information reasonably available to the creditor at the time the disclosure is provided. See comment 19(e)(1)(i)-1. For example, such information could include amounts the creditor has previously charged in similar construction transactions or the amount of estimated inspection and handling fees used by the creditor for purposes of setting the construction loan's commitment amount.

37(g) Closing cost details; other costs.

1. General description. The items listed under the heading of “Other Costs” pursuant to § 1026.37(g) include services that are ancillary to the creditor's decision to evaluate the collateral and the consumer for the loan. The amounts disclosed for these items are: Established by government action; determined by standard calculations applied to ongoing fixed costs; or based on an obligation incurred by the consumer independently of any requirement imposed by the creditor. Except for prepaid interest under § 1026.37(g)(2)(iii), or charges for optional credit insurance provided by the creditor, the creditor does not retain any of the amounts or portions of the amounts disclosed as other costs.

2. Charges pursuant to property contract. The creditor is required to disclose charges that are described in § 1026.37(g)(1) through (3). Other charges that are required to be paid at or before closing pursuant to the property contract for sale between the consumer and seller are disclosed on the Loan Estimate to the extent the creditor has knowledge of those charges when it issues the Loan Estimate, consistent with the good faith standard under § 1026.19(e). A creditor has knowledge of those charges where, for example, it has the real estate purchase and sale contract. See also § 1026.37(g)(4) and comment 37(g)(4)-3.

37(g)(1) Taxes and other government fees.

1. Recording fees. Recording fees listed under § 1026.37(g)(1) are fees assessed by a government authority to record and index the loan and title documents as required under State or local law. Recording fees are assessed based on the type of document to be recorded or its physical characteristics, such as the number of pages. Unlike transfer taxes, recording fees are not based on the sale price of the property or loan amount. For example, a fee for recording a subordination agreement that is $20, plus $3 for each page over three pages, is a recording fee, but a fee of $1,250 based on 0.5 percent of the loan amount is a transfer tax, and not a recording fee.

2. Other government charges. Any charges or fees imposed by a State or local government that are not transfer taxes are aggregated with recording fees and disclosed under § 1026.37(g)(1)(i).

3. Transfer taxes - terminology. In general, transfer taxes listed under § 1026.37(g)(1) are State and local government fees on mortgages and home sales that are based on the loan amount or sales price, while recording fees are State and local government fees for recording the loan and title documents. The name that is used under State or local law to refer to these amounts is not determinative of whether they are disclosed as transfer taxes or as recording fees and other taxes under § 1026.37(g)(1).

4. Transfer taxes - consumer. Only transfer taxes paid by the consumer are disclosed on the Loan Estimate pursuant to § 1026.37(g)(1). State and local government transfer taxes are governed by State or local law, which determines if the seller or consumer is ultimately responsible for paying the transfer taxes. For example, if State law indicates a lien can attach to the consumer's acquired property if the transfer tax is not paid, the transfer tax is disclosed. If State or local law is unclear or does not specifically attribute transfer taxes to the seller or the consumer, the creditor is in compliance with requirements of § 1026.37(g)(1) if the amount of the transfer tax disclosed is not less than the amount apportioned to the consumer using common practice in the locality of the property.

5. Transfer taxes - seller. Transfer taxes paid by the seller in a purchase transaction are not disclosed on the Loan Estimate under § 1026.37(g)(1), but are disclosed on the Closing Disclosure pursuant to § 1026.38(g)(1)(ii).

6. Deletion and addition of items. The lines and labels required by § 1026.37(g)(1) may not be deleted, even if recording fees or transfer taxes are not charged to the consumer. No additional items may be listed under the subheading in § 1026.37(g)(1).

37(g)(2) Prepaids.

1. Examples. Prepaid items required to be disclosed pursuant to § 1026.37(g)(2) include the interest due at consummation for the period of time before interest begins to accrue for the first scheduled periodic payment and certain periodic charges that are required by the creditor to be paid at consummation. Each periodic charge listed as a prepaid item indicates, as applicable, the time period that the charge will cover, the daily amount, the percentage rate of interest used to calculate the charge, and the total dollar amount of the charge. Examples of periodic charges that are disclosed pursuant to § 1026.37(g)(2) include:

i. Real estate property taxes due within 60 days after consummation of the transaction;

ii. Past-due real estate property taxes;

iii. Mortgage insurance premiums;

iv. Flood insurance premiums; and

v. Homeowner's insurance premiums.

2. Interest rate. The interest rate disclosed pursuant to § 1026.37(g)(2)(iii) is the same interest rate disclosed pursuant to § 1026.37(b)(2).

3. Terminology. For purposes of § 1026.37(g)(2), the term “property taxes” has the same meaning as in § 1026.43(b)(8) and further described in comment 43(b)(8)-2; the term “homeowner's insurance” means the amounts identified in § 1026.4(b)(8); and the term “mortgage insurance” has the same meaning as “mortgage insurance or any functional equivalent” in § 1026.37(c), which means the amounts identified in § 1026.4(b)(5).

4. Deletion of items. The lines and labels required by § 1026.37(g)(2) may not be deleted, even if amounts for those labeled items are not charged to the consumer. If an amount for a labeled item is not charged to the consumer, the time period, daily amount, and percentage used in the labels are left blank.

37(g)(3) Initial escrow payment at closing.

1. Listed item not charged. Pursuant to § 1026.37(g)(3), each periodic charge to be included in the escrow or reserve account must be itemized under the “Initial Escrow Payment at Closing” subheading, with a relevant label, monthly payment amount, and number of months expected to be collected at consummation. If an item described in § 1026.37(g)(3)(i) through (iii) is not charged to the consumer, the monthly payment amount and time period used in the labels are left blank.

2. Aggregate escrow account calculation. The aggregate escrow account adjustment required under § 1026.38(g)(3) and 12 CFR 1024.17(d)(2) is not included on the Loan Estimate under § 1026.37(g)(3).

3. Terminology. As used in § 1026.37(g)(3), the term “property taxes” has the same meaning as in § 1026.43(b)(8) and further described in comment 43(b)(8)-2; the term “homeowner's insurance” means the amounts identified in § 1026.4(b)(8); and the term “mortgage insurance” has the same meaning as “mortgage insurance or any functional equivalent” in § 1026.37(c).

4. Deletion of items. The lines and labels required by § 1026.37(g)(3) may not be deleted, even if amounts for those labeled items are not charged to the consumer.

5. Escrowed tax payments for different time frames. Payments for property taxes that are paid at different time periods can be itemized separately when done in accordance with 12 CFR 1024.17, as applicable. For example, a general property tax covering a fiscal year from January 1 to December 31 can be listed as a property tax under § 1026.37(g)(3)(i); and a separate property tax to fund schools that cover a fiscal year from November 1 to October 31 can be added as a separate item under § 1026.37(g)(3)(v).

37(g)(4) Other.

1. Owner's title insurance policy rate. The amount disclosed for an owner's title insurance premium pursuant to § 1026.37(g)(4) is based on a basic owner's policy rate, and not on an “enhanced” title insurance policy premium, except that the creditor may instead disclose the premium for an “enhanced” policy when the “enhanced” title insurance policy is required by the real estate sales contract, if such requirement is known to the creditor when issuing the Loan Estimate. This amount should be disclosed as “Title - Owner's Title Policy (optional),” or in any similar manner that includes the introductory description “Title -” at the beginning of the label for the item, the parenthetical description “(optional)” at the end of the label, and clearly indicates the amount of the premium disclosed pursuant to § 1026.37(g)(4) is for the owner's title insurance coverage. See comment 37(f)(2)-4 for a discussion of the disclosure of the premium for lender's title insurance coverage.

2. Simultaneous title insurance premium rate in purchase transactions. The premium for an owner's title insurance policy for which a special rate may be available based on the simultaneous issuance of a lender's and an owner's policy is calculated and disclosed pursuant to § 1026.37(g)(4) as follows:

i. The title insurance premium for a lender's title policy is based on the full premium rate, consistent with § 1026.37(f)(2) or (f)(3).

ii. The owner's title insurance premium is calculated by taking the full owner's title insurance premium, adding the simultaneous issuance premium for the lender's coverage, and then deducting the full premium for lender's coverage.

3. Designation of optional items. Products disclosed under § 1026.37(g)(4) for which the parenthetical description “(optional)” is included at the end of the label for the item include only items that are separate from any item disclosed on the Loan Estimate under paragraphs other than § 1026.37(g)(4). For example, such items may include optional owner's title insurance, credit life insurance, debt suspension coverage, debt cancellation coverage, warranties of home appliances and systems, and similar products, when coverage is written in connection with a credit transaction that is subject to § 1026.19(e). However, because the requirement in § 1026.37(g)(4)(ii) applies to separate products only, additional coverage and endorsements on insurance otherwise required by the lender are not disclosed under § 1026.37(g)(4). See comments 4(b)(7) and (b)(8)-1 through -3 and comments 4(b)(10)-1 and -2 for guidance on determining when credit life insurance, debt suspension coverage, debt cancellation coverage, and similar coverage is written in connection with a transaction subject to § 1026.19(e).

4. Examples. Examples of other items that are disclosed under § 1026.37(g)(4) if the creditor is aware of those items when it issues the Loan Estimate include commissions of real estate brokers or agents, additional payments to the seller to purchase personal property pursuant to the property contract, homeowner's association and condominium charges associated with the transfer of ownership, and fees for inspections not required by the creditor but paid by the consumer pursuant to the property contract. Although the consumer is obligated for these costs, they are not imposed upon the consumer by the creditor or loan originator. Therefore, they are not disclosed with the parenthetical description “(optional)” at the end of the label for the item, and they are disclosed pursuant to § 1026.37(g) rather than § 1026.37(f). Even if such items are not required to be disclosed on the Loan Estimate under § 1026.37(g)(4), however, they may be required to be disclosed on the Closing Disclosure pursuant to § 1026.38. Comment 19(e)(3)(iii)-3 discusses application of the good faith requirement for services chosen by the consumer that are not required by the creditor.

37(g)(6) Total closing costs.

Paragraph 37(g)(6)(ii)..

1. Lender credits. Section 1026.19(e)(1)(i) requires disclosure of lender credits as provided in § 1026.37(g)(6)(ii). Such lender credits include non-specific lender credits as well as specific lender credits. See comment 19(e)(3)(i)-5.

2. Credits or rebates from the creditor to offset a portion or all of the closing costs. For loans where a portion or all of the closing costs are offset by a credit or rebate provided by the creditor (sometimes referred to as “no-cost” loans), whether all or a defined portion of the closing costs disclosed under § 1026.37(f) or (g) will be paid by a credit or rebate from the creditor, the creditor discloses such credit or rebate as a lender credit under § 1026.37(g)(6)(ii). The creditor should ensure that the lender credit disclosed under § 1026.37(g)(6)(ii) is sufficient to cover the estimated costs the creditor represented to the consumer as not being required to be paid by the consumer at consummation, regardless of whether such representations pertained to specific items.

37(g)(7) Item descriptions and ordering.

1. Clear and conspicuous standard. See comment 37(f)(5)-1 for guidance regarding the requirement to label items using terminology that describes each item.

37(g)(8) Use of addenda.

1. State law disclosures. If a creditor is required by State law to make additional disclosures that, pursuant to § 1026.37(g)(8), cannot be included in the disclosures required under § 1026.37(g), the creditor may make those additional State law disclosures on a separate document whose pages are physically separate from, and are not presented as part of, the disclosures prescribed in § 1026.37. See comment 37(o)(1)-1.

37(h) Calculating cash to close.

37(h)(1) for all transactions..

1. Labels for amounts disclosed. Section 1026.37(h)(1) describes the amounts that are used to calculate the estimated amount of cash or other funds that the consumer must provide at consummation. The labels that are to be used under § 1026.37(h)(1) are illustrated by form H-24(A) of appendix H to this part.

2. Simultaneous subordinate financing. On the Loan Estimate for simultaneous subordinate financing purchase transactions, the sale price disclosed under § 1026.37(a)(7)(i) is not used under § 1026.37(h)(1) for the calculating cash to close table calculations that include the sale price as a component of the calculation. For example, sale price is generally included in the closing costs financed calculation under § 1026.37(h)(1)(ii) as a component of the estimated total amount of payments to third parties. However, for simultaneous subordinate financing transactions, the estimated total amount of payments to third parties would not include the sale price. The estimated total amount of payments to third parties only includes payments occurring in the simultaneous subordinate financing transaction other than payments toward the sale price.

37(h)(1)(ii) Closing costs financed.

1. Calculation of amount. The amount of closing costs financed disclosed under § 1026.37(h)(1)(ii) is determined by subtracting the estimated total amount of payments to third parties not otherwise disclosed under § 1026.37(f) and (g) from the loan amount disclosed under § 1026.37(b)(1). The estimated total amount of payments to third parties includes the sale price disclosed under § 1026.37(a)(7)(i), if applicable, unless otherwise excluded under comment 37(h)(1)-2. Other examples of payments to third parties not otherwise disclosed under § 1026.37(f) and (g) include the amount of construction costs for transactions that involve improvements to be made on the property and payoffs of secured or unsecured debt. If the result of the calculation is zero or negative, the amount of $0 is disclosed under § 1026.37(h)(1)(ii). If the result of the calculation is a positive number, that amount is disclosed as a negative number under § 1026.37(h)(1)(ii), but only to the extent that the absolute value of the amount disclosed under § 1026.37(h)(1)(ii) does not exceed the total amount of closing costs disclosed under § 1026.37(g)(6).

2. Loan amount. The loan amount disclosed under § 1026.37(b)(1), a component of the closing costs financed calculation, is the total amount the consumer will borrow, as reflected by the face amount of the note.

37(h)(1)(iii) Down payment and other funds from borrower.

1. Down payment and funds from borrower calculation. For purposes of § 1026.37(h)(1)(iii)(A)( 1 ), the down payment and funds from borrower amount is calculated as the difference between the sale price of the property disclosed under § 1026.37(a)(7)(i) and the sum of the loan amount and any amount of existing loans assumed or taken subject to that will be disclosed on the Closing Disclosure under § 1026.38(j)(2)(iv). The calculation is independent of any loan program or investor requirements.

2. Funds for borrower. Section 1026.37(h)(1)(iii)(A)( 2 ) requires that, in a purchase transaction as defined in paragraph (a)(9)(i) of this section that is a simultaneous subordinate financing transaction or that involves improvements to be made on the property, or when the sum of the loan amount disclosed under § 1026.37(b)(1) and any amount of existing loans assumed or taken subject to that will be disclosed under § 1026.38(j)(2)(iv) exceeds the sale price disclosed under § 1026.37(a)(7)(i), the amount of funds from the consumer is determined in accordance with § 1026.37(h)(1)(v). Section 1026.37(h)(1)(iii)(B) requires that, for all non-purchase transactions, the amount of estimated funds from the consumer is determined in accordance with § 1026.37(h)(1)(v). Pursuant to § 1026.37(h)(1)(v), the amount to be disclosed under § 1026.37(h)(1)(iii)(A)( 2 ) or (B) is determined by subtracting the sum of the loan amount disclosed under § 1026.37(b)(1) and any amount of existing loans assumed or taken subject to that will be disclosed under § 1026.38(j)(2)(iv) (excluding any closing costs financed disclosed under § 1026.37(h)(1)(ii)) from the total amount of all existing debt being satisfied in the transaction. The total amount of all existing debt being satisfied in the transaction is the sum of the amounts that will be disclosed on the Closing Disclosure in the summaries of transactions table under § 1026.38(j)(1)(ii), (iii), and (v), as applicable. When the result of the calculation is positive, that amount is disclosed under § 1026.37(h)(1)(iii) as “Down Payment/Funds from Borrower,” and $0 is disclosed under § 1026.37(h)(1)(v) as “Funds for Borrower.” When the result of the calculation is negative, that amount is disclosed as a negative number under § 1026.37(h)(1)(v) as “Funds for Borrower,” and $0 is disclosed under § 1026.37(h)(1)(iii) as “Down Payment/Funds from Borrower.” When the result is $0, $0 is disclosed as “Down Payment/Funds from Borrower” and “Funds for Borrower” under § 1026.37(h)(1)(iii) and (v), respectively.

37(h)(1)(iv) Deposit.

1. Section 1026.37(h)(1)(iv)(A) requires disclosure of a deposit in a purchase transaction. The deposit to be disclosed under § 1026.37(h)(1)(iv)(A) is any amount that the consumer has agreed to pay to a party identified in the real estate purchase and sale agreement to be held until consummation of the transaction, which is often referred to as an earnest money deposit. In a purchase transaction in which no such deposit is paid in connection with the transaction, § 1026.37(h)(1)(iv)(A) requires the creditor to disclose $0. In any other type of transaction, § 1026.37(h)(1)(iv)(B) requires disclosure of the deposit amount as $0.

37(h)(1)(v) Funds for borrower.

1. No funds for borrower. When the down payment and other funds from the borrower is determined in accordance with § 1026.37(h)(1)(iii)(A)( 1 ), the amount disclosed under § 1026.37(h)(1)(v) as funds for the borrower is $0.

2. Total amount of existing debt satisfied in the transaction. The amounts disclosed under § 1026.37(h)(1)(iii)(A)( 2 ) or (B), as applicable, and (h)(1)(v) are determined by subtracting the sum of the loan amount disclosed under § 1026.37(b)(1) and any amount of existing loans assumed or taken subject to that will be disclosed on the Closing Disclosure under § 1026.38(j)(2)(iv) (excluding any closing costs financed disclosed under § 1026.37(h)(1)(ii)) from the total amount of all existing debt being satisfied in the transaction. The total amount of all existing debt being satisfied in the transaction is the sum of the amounts that will be disclosed on the Closing Disclosure in the summaries of transactions table under § 1026.38(j)(1)(ii), (iii), and (v), as applicable.

37(h)(1)(vi) Seller credits.

1. Non-specific seller credits to be disclosed. Non-specific seller credits, i.e., general payments from the seller to the consumer that do not pay for a particular fee on the disclosures provided under § 1026.19(e)(1), known to the creditor at the time of delivery of the Loan Estimate, are disclosed under § 1026.37(h)(1)(vi). For example, a creditor may learn the amount of seller credits that will be paid in the transaction from information obtained from the consumer, from a review of the purchase and sale contract, or from information obtained from a real estate agent in the transaction.

2. Seller credits for specific charges. To the extent known by the creditor at the time of delivery of the Loan Estimate, specific seller credits, i.e., seller credits for specific items disclosed under § 1026.37(f) and (g), may be either disclosed under § 1026.37(h)(1)(vi) or reflected in the amounts disclosed for those specific items under § 1026.37(f) and (g). For example, if the creditor knows at the time of the delivery of the Loan Estimate that the seller has agreed to pay half of a $100 required pest inspection fee, the creditor may either disclose the required pest inspection fee as $100 under § 1026.37(f) with a $50 seller credit disclosed under § 1026.37(h)(1)(vi) or disclose the required pest inspection fee as $50 under § 1026.37(f), reflecting the specific seller credit in the amount disclosed for the pest inspection fee. If the creditor knows at the time of the delivery of the Loan Estimate that the seller has agreed to pay the entire $100 pest inspection fee, the creditor may either disclose the required pest inspection fee as $100 under § 1026.37(f) with a $100 seller credit disclosed under § 1026.37(h)(1)(vi) or disclose nothing under § 1026.37(f), reflecting that the specific seller credit will cover the entire pest inspection fee.

37(h)(1)(vii) Adjustments and other credits.

1. Other credits known at the time the Loan Estimate is issued. Amounts expected to be paid at closing by third parties not otherwise associated with the transaction, such as gifts from family members and not otherwise identified under § 1026.37(h)(1), are included in the amount disclosed under § 1026.37(h)(1)(vii). Amounts expected to be provided in advance of closing by third parties, including family members, not otherwise associated with the transaction are not required to be disclosed under § 1026.37(h)(1)(vii).

2. Persons that may make payments causing adjustment and other credits. Persons, as defined under § 1026.2(a)(22), means natural persons or organizations. Accordingly, persons that may pay amounts disclosed under § 1026.37(h)(1)(vii) include, for example, any individual family members providing gifts or a developer or home builder organization providing a credit in the transaction.

3. Credits. Only credits from persons other than the creditor or seller can be disclosed pursuant to § 1026.37(h)(1)(vii). Seller credits and credits from the creditor are disclosed pursuant to § 1026.37(h)(1)(vi) and § 1026.37(g)(6)(ii), respectively.

4. Other credits to be disclosed. Credits other than those from the creditor or seller are disclosed under § 1026.37(h)(1)(vii). Disclosure of other credits is, like other disclosures under § 1026.37, subject to the good faith requirement under § 1026.19(e)(1)(i). See § 1026.19(e)(1)(i) and comments 17(c)(2)(i)-1 and 19(e)(1)(i)-1. The creditor may obtain information regarding items to be disclosed under § 1026.37(h)(1)(vii), for example, from the consumer, from a review of the purchase and sale contract, or from information obtained from a real estate agent in the transaction.

5. Proceeds from subordinate financing or other source. Funds that are provided to the consumer from the proceeds of subordinate financing, local or State housing assistance grants, or other similar sources are included in the amount disclosed under § 1026.37(h)(1)(vii) on the first-lien transaction Loan Estimate.

6. Reduction in amounts for adjustments. Adjustments that require additional funds from the consumer in a transaction disclosed using the formula under § 1026.37(h)(1)(iii)(A)( 1 ) or pursuant to the real estate purchase and sale contract, such as for additional personal property that will be disclosed on the Closing Disclosure under § 1026.38(j)(1)(iii) or adjustments that will be disclosed on the Closing Disclosure under § 1026.38(j)(1)(v), are only included in the amount disclosed under § 1026.37(h)(1)(vii) if such amounts are not included in the calculation under § 1026.37(h)(1)(iii)(A)( 2 ) or (B) or § 1026.37(h)(1)(v) as debt being satisfied in the transaction. Other examples of adjustments for additional funds from the consumer include payoffs of secured or unsecured debt in a purchase transaction disclosed using the formula under § 1026.37(h)(1)(iii)(A)( 1 ) or prorations for property taxes and homeowner's association dues. The total amount disclosed under § 1026.37(h)(1)(vii) is a sum of adjustments requiring additional funds from the consumer, calculated as positive amounts, and other credits, such as those provided for in comment 37(h)(1)(vii)-1, calculated as negative amounts.

37(h)(1)(viii) Estimated cash to close.

1. Result of cash to close calculation. The sum of the amounts disclosed pursuant to § 1026.37(h)(1)(i) through (vii) is disclosed under § 1026.37(h)(1)(viii) as either a positive number, a negative number, or zero. A positive number indicates the amount that the consumer will pay at consummation. A negative number indicates the amount that the consumer will receive at consummation. A result of zero indicates that the consumer will neither pay nor receive any amount at consummation.

37(h)(2) Optional alternative calculating cash to close table for transactions without a seller or for simultaneous subordinate financing.

1. Optional use. The optional alternative disclosure of the calculating cash to close table in § 1026.37(h)(2) may only be provided by a creditor in a transaction without a seller or for simultaneous subordinate financing. In a purchase transaction, the optional alternative disclosure may be used for the simultaneous subordinate financing Loan Estimate only if the first-lien Closing Disclosure will record the entirety of the seller's transaction. The use of this alternative table for transactions without a seller or for simultaneous subordinate financing is optional, but creditors may only use this alternative estimated cash to close disclosure in conjunction with the alternative disclosure under § 1026.37(d)(2).

37(h)(2)(iii) Payoffs and payments.

1. Examples. Examples of the amounts incorporated in the total amount disclosed under § 1026.37(h)(2)(iii) include, but are not limited to: Payoffs of existing liens secured by the property identified under § 1026.37(a)(6) such as existing mortgages, deeds of trust, judgments that have attached to the real property, mechanics' and materialmen's liens, and local, State and Federal tax liens; payments of unsecured outstanding debts of the consumer; construction costs associated with the transaction that the consumer will be obligated to pay in any transaction in which the creditor is otherwise permitted to use the alternative calculating cash to close table; and payments to other third parties for outstanding debts of the consumer, excluding settlement services, as required to be paid as a condition for the extension of credit. Amounts that will be paid with funds provided by the consumer, including partial payments, such as a portion of construction costs, or amounts that will be paid by third parties and will be disclosed on the Closing Disclosure under § 1026.38(t)(5)(vii)(B), are calculated as credits, using positive numbers, in the total amount disclosed under § 1026.37(h)(2)(iii).

2. Disclosure of subordinate financing. i. First-lien Loan Estimate. On the Loan Estimate for a first-lien transaction disclosed with the optional alternative table pursuant to § 1026.37(h)(2), such as a refinance transaction that also has simultaneous subordinate financing, the proceeds of the simultaneous subordinate financing are included, as a positive number, in the total amount disclosed under § 1026.37(h)(2)(iii). The total amount disclosed under § 1026.37(h)(2)(iii) is a negative number unless the proceeds from the subordinate financing and any amounts entered as credits as discussed in comment 37(h)(2)(iii)-1 equal or exceed the total amount of other payoffs and payments that are included in the calculation under § 1026.37(h)(2)(iii). If the proceeds from the subordinate financing and any amounts entered as credits as discussed in comment 37(h)(2)(iii)-1 equal or exceed the total amount of other payoffs and payments that are included in the calculation under § 1026.37(h)(2)(iii), the total amount disclosed under § 1026.37(h)(2)(iii) is disclosed as $0 or a positive number.

ii. Simultaneous subordinate financing Loan Estimate. On the simultaneous subordinate financing Loan Estimate disclosed with the optional alternative table pursuant to § 1026.37(h)(2), the proceeds of the subordinate financing that will be applied to the first-lien transaction may be included in the payoffs and payments disclosure under § 1026.37(h)(2)(iii).

37(h)(2)(iv) Cash to or from consumer.

1. Method of indication. The indication of whether the estimated cash to close is either due from or payable to the consumer is made by the use of check boxes, which is illustrated by form H-24(D) of appendix H to this part.

37(h)(2)(v) Closing costs financed.

1. Limitation on amount disclosed. The amount disclosed under § 1026.37(h)(2)(v) is limited to the total amount of closing costs disclosed under § 1026.37(g)(6), even if the difference between § 1026.37(h)(2)(i) and § 1026.37(h)(2)(iii) is greater than the amount disclosed under § 1026.37(g)(6).

37(i) Adjustable payment table.

1. When table is not permitted to be disclosed. The disclosure described in § 1026.37(i) is required only if the periodic principal and interest payment may change after consummation based on a loan term other than a change to the interest rate, or the transaction contains a seasonal payment product feature as described in § 1026.37(a)(10)(ii)(E). If the transaction does not contain such loan terms, this table shall not appear on the Loan Estimate.

2. Periods to be disclosed. Section 1026.37(i)(1) through (4) requires disclosure of the periods during which interest only, optional payment, step payment, and seasonal payment product features will be in effect. The periods required to be disclosed should be disclosed by describing the number of payments counting from the first periodic payment due after consummation. The period of seasonal payments required to be disclosed by § 1026.37(i)(4), to be clear and conspicuous, should be disclosed with a noun that identifies the unit-period, because such feature may apply on a regular basis during the loan term that does not depend on when regular periodic payments begin. The disclosures required by § 1026.37(i)(1) through (4) may include abbreviations to fit in the space provided for the information on form H-24, provided the information is disclosed in a clear and conspicuous manner. For example:

i. Period from date of consummation. If a loan has an interest only period for the first 60 regular periodic payments due after consummation, the disclosure states “for your first 60 payments.”

ii. Period during middle of loan term. If the loan has an interest only period between the 61st and 85th payments, the disclosure states “from your 61st to 85th payment.”

iii. Multiple successive periods. If there are multiple periods during which a certain adjustable payment term applies, such as a period of step payments that occurs from the first through 12th payments, does not occur from the 13th through 24th payments, and occurs again from the 25th through 36th payments, the period disclosed is the entire span of all such periods. Accordingly, such period is disclosed as “for your first 36 payments.”

iv. Seasonal payments. For a seasonal payment product with a unit-period of a month that does not require periodic payments for the months of June, July, and August each year during the loan term, because such feature depends on calendar months and not on when regular periodic payments begin, the period is disclosed as “from June to August.” For a transaction with a quarterly unit-period that does not require a periodic payment every third quarter during the loan term and does not depend on calendar months, the period is disclosed as “every third payment.” In the same transaction, if the seasonal payment feature ends after the 20th quarter, the period is disclosed as “every quarter until the 20th quarter.” As described above in this comment 37(i)-2, the creditor may abbreviate “quarter” to “quart.” or “Q.”

37(i)(5) Principal and interest payments.

1. Statement of periodic payment frequency. The subheading required by § 1026.37(i)(5) must include the unit-period of the transaction, such as “quarterly,” “bi-weekly,” or “annual.” This unit-period should be the same as disclosed under § 1026.37(b)(3). See § 1026.37(o)(5)(i).

2. Initial payment adjustment unknown. The disclosure required by § 1026.37(i)(5) must state the number of the first payment for which the regular periodic principal and interest payment may change. This payment is typically set forth in the legal obligation. However, if the exact payment number of the first adjustment is not known at the time the creditor provides the Loan Estimate, the creditor must disclose the earliest possible payment that may change under the terms of the legal obligation, based on the information available to the creditor at the time, as the initial payment number and amount.

3. Subsequent changes. The disclosure required by § 1026.37(i)(5) must state the frequency of adjustments to the regular periodic principal and interest payment after the initial adjustment, if any, expressed in years, except if adjustments are more frequent than once every year, in which case the disclosure should be expressed as payments. If there is only one adjustment of the periodic payment under the terms of the legal obligation (for example, if the loan has an interest only period for the first 60 payments and there are no adjustments to the payment after the end of the interest only period), the disclosure should state: “No subsequent changes.” If the loan has graduated increases in the regular periodic payment every 12th payment, the disclosure should state: “Every year.” If the frequency of adjustments to the periodic payment may change under the terms of the legal obligation, the disclosure should state the smallest period of adjustments that may occur. For example, if an increase in the periodic payment is scheduled every sixth payment for 36 payments, and then every 12th payment for the next 24 payments, the disclosure should state: “Every 6th payment.”

4. Maximum payment. The disclosure required by § 1026.37(i)(5) must state the larger of the maximum scheduled or maximum potential amount of a regular periodic principal and interest payment under the terms of the legal obligation, as well as the payment number of the first periodic principal and interest payment that can reach such amount. If the disclosed payment is scheduled, § 1026.37(i)(5) requires that the disclosure state the payment number when such payment is reached with the preceding text, “starting at.” If the disclosed payment is only potential, as may be the case for a loan that permits optional payments, the disclosure states the earliest payment number when such payment can be reached with the preceding text, “as early as.” Section 1026.37(i)(5) requires that the first possible periodic principal and interest payment that can reach the maximum be disclosed. For example, for a fixed interest rate optional-payment loan with scheduled payments that result in negative amortization under the terms of the legal obligation, the maximum periodic payment disclosed should be based on the consumer having elected to make the periodic payments that would increase the principal balance to the maximum amount at the latest time possible before the loan begins to fully amortize, which would cause the periodic principal and interest payment to be the maximum possible. For example, if the earliest payment that could reach the maximum principal balance was the 41st payment at which time the loan would begin to amortize and the periodic principal and interest payment would be recalculated, but the last payment that permitted the principal balance to increase was the 60th payment, the disclosure required by § 1026.37(i)(5) must assume the consumer only reaches the maximum principal balance at the 60th payment because this would result in the maximum possible principal and interest payment under the terms of the legal obligation. The disclosure must state the maximum periodic principal and interest payment based on this assumption and state “as early as the 61st payment.”

5. Payments that do not pay principal. Although the label of the disclosure required by § 1026.37(i)(5) is “Principal and Interest Payments,” and the section refers to periodic principal and interest payments, it includes a scheduled periodic payment that only covers some or all of the interest that is due and not any principal ( i.e., an interest only or negatively amortizing payment).

37(j) Adjustable interest rate table.

1. When table is not permitted to be disclosed. The disclosure described in § 1026.37(j) is required only if the interest rate may increase after consummation, either based on changes to an index or scheduled changes to the interest rate. If the legal obligation does not permit the interest rate to adjust after consummation, such as for a “Fixed Rate” product under § 1026.37(a)(10), this table is not permitted to appear on the Loan Estimate. The creditor may not disclose a blank table or a table with “N/A” inserted within each row.

37(j)(1) Index and margin.

1. Index and margin. The index disclosed pursuant to § 1026.37(j)(1) must be stated such that a consumer reasonably can identify it. A common abbreviation or acronym of the name of the index may be disclosed in place of the proper name of the index, if it is a commonly used public method of identifying the index. For example, “SOFR” may be disclosed instead of Secured Overnight Financing Rate. The margin should be disclosed as a percentage. For example, if the contract determines the interest rate by adding 4.25 percentage points to the index, the margin should be disclosed as “4.25%.”

37(j)(2) Increases in interest rate.

1. Adjustments not based on an index. If the legal obligation includes both adjustments to the interest rate based on an external index and scheduled and pre-determined adjustments to the interest rate, such as for a “Step Rate” product under § 1026.37(a)(10), the disclosure required by § 1026.37(j)(1), and not § 1026.37(j)(2), must be provided pursuant to § 1026.37(j)(2). The disclosure described in § 1026.37(j)(2) is stated only if the product type does not permit the interest rate to adjust based on an external index.

37(j)(3) Initial interest rate.

1. Interest rate at consummation. In all cases, the interest rate in effect at consummation must be disclosed as the initial interest rate, even if it will apply only for a short period, such as one month.

37(j)(4) Minimum and maximum interest rate.

1. Minimum interest rate. The minimum interest rate required to be disclosed by § 1026.37(j)(4) is the minimum interest rate that may occur at any time during the term of the transaction, after any introductory or “teaser” interest rate expires, under the terms of the legal obligation, such as an interest rate “floor.” If the terms of the legal obligation do not state a minimum interest rate, the minimum interest rate that applies to the transaction under applicable law must be disclosed. If the terms of the legal obligation do not state a minimum interest rate, and no other minimum interest rate applies to the transaction under applicable law, the amount of the margin is disclosed.

2. Maximum interest rate. The maximum interest rate required to be disclosed pursuant to § 1026.37(j)(4) is the maximum interest rate permitted under the terms of the legal obligation, such as an interest rate “cap.” If the terms of the legal obligation do not specify a maximum interest rate, the maximum interest rate permitted by applicable law, such as State usury law, must be disclosed.

37(j)(5) Frequency of adjustments.

1. Exact month unknown. The disclosure required by § 1026.37(j)(5) must state the first month for which the interest rate may change. This month is typically scheduled in the terms of the legal obligation. However, if the exact month is not known at the time the creditor provides the Loan Estimate, the creditor must disclose the earliest possible month under the terms of the legal obligation, based on the best information available to the creditor at the time.

37(j)(6) Limits on interest rate changes.

1. Different limits on subsequent interest rate adjustments. If more than one limit applies to the amount of adjustments to the interest rate after the initial adjustment, the greatest limit on subsequent adjustments must be disclosed. For example, if the initial interest rate adjustment is capped at two percent, the second adjustment is capped at two and a half percent, and all subsequent adjustments are capped at three percent, the disclosure required by § 1026.37(j)(6)(ii) states “3%.”

37(k) Contact information.

1. NMLSR ID. Section 1026.37(k) requires the disclosure of an Nationwide Mortgage Licensing System and Registry (NMLSR ID) number for each creditor, mortgage broker, and loan officer identified on the Loan Estimate. The NMLSR ID is a unique number or other identifier generally assigned to individuals registered or licensed through NMLSR to provide loan originating services. For more information, see the Secure and Fair Enforcement for Mortgage Licensing Act of 2008 (SAFE Act) sections 1503(3) and (12) and 1504 (12 U.S.C. 5102(3) and (12) and 5103), and its implementing regulations ( i.e., 12 CFR 1007.103(a) and 1008.103(a)(2)). An entity may also have an NMLSR ID. Thus, if the creditor, mortgage broker, or loan officer has obtained an NMLSR ID, the NMLSR IDs must be provided in the disclosures required by § 1026.37(k)(1) and (2).

2. License number or unique identifier. Section 1026.37(k)(1) and (2) requires the disclosure of a license number or unique identifier for the creditor, mortgage broker, and loan officer if such entity or individual has not obtained an NMLSR ID. In such event, if the applicable State, locality, or other regulatory body with responsibility for licensing and/or registering such entity's or individual's business activities has issued a license number or other unique identifier to such entity or individual, that number is disclosed. In addition, § 1026.37(k)(1) and (2) require the abbreviation of the State of the jurisdiction or regulatory body that issued such license or registration is required to be included before the word “License” in the label required by § 1026.37(k)(1) and (2). If no such license or registration is required to be disclosed, such as if an NMLSR number is disclosed, the space provided for such an abbreviation in form H-24 of appendix H to this part may be left blank. A U.S. Postal Service State abbreviation complies with § 1026.37(k)(1) and (2), if applicable.

3. Contact. Section 1026.37(k)(2) requires the disclosure of the name and NMLSR ID of the person who is the primary contact for the consumer, labeled “Loan Officer.” The loan officer is generally the natural person employed by the creditor or mortgage broker disclosed under § 1026.37(k)(1) who interacts most frequently with the consumer and who has an NMLSR ID or, if none, a license number or other unique identifier to be disclosed under § 1026.37(k)(2), as applicable.

4. Email address and phone number. Section 1026.37(k)(3) requires disclosure of the loan officer's email address and phone number. Disclosure of a general number or email address for the loan officer's lender or mortgage broker, as applicable, satisfies this requirement if no such information is generally available for such person.

37(l) Comparisons.

37(l)(1) in five years..

1. Loans with terms of less than five years. In transactions with a scheduled loan term of less than 60 months, to comply with § 1026.37(l)(1), the creditor discloses the amounts paid through the end of the loan term.

Paragraph 37(l)(1)(i).

1. Calculation of total payments in five years. The amount disclosed under § 1026.37(l)(1)(i) is the sum of principal, interest, mortgage insurance, and loan costs scheduled to be paid through the end of the 60th month after the due date of the first periodic payment. For guidance on how to calculate interest for mortgage loans that are Adjustable Rate products under § 1026.37(a)(10)(i)(A) for purposes of § 1026.37(l)(1)(i), see comment 17(c)(1)-10. In addition, for purposes of § 1026.37(l)(1)(i), the creditor should assume that the consumer makes payments as scheduled and on time. For purposes of § 1026.37(l)(1)(i), mortgage insurance means “mortgage insurance or any functional equivalent” as defined under comment 37(c)(1)(i)(C)-1 and includes prepaid or escrowed mortgage insurance. Loan costs are those costs disclosed under § 1026.37(f).

2. Negative amortization loans. For loans that have a negative amortization feature under § 1026.37(a)(10)(ii)(A), the creditor calculates the total payments in five years using the scheduled payments, even if it is a negatively amortizing payment amount, until the consumer must begin making fully amortizing payments under the terms of the legal obligation.

Paragraph 37(l)(1)(ii).

1. Calculation of principal paid in five years. The disclosure required by § 1026.37(l)(1)(ii) is calculated in the same manner as the disclosure required by § 1026.37(l)(1)(i), except that the disclosed amount reflects only the total payments to principal through the end of the 60th month after the due date of the first periodic payment.

37(l)(3) Total interest percentage.

1. General. When calculating the total interest percentage, the creditor assumes that the consumer will make each payment in full and on time and will not make any additional payments. The creditor includes prepaid interest that the consumer will pay when calculating the total interest percentage. Prepaid interest that is disclosed as a negative number under §§ 1026.37(g)(2) or 1026.38(g)(2) is included as a negative value when calculating the total interest percentage.

2. Adjustable rate and step rate mortgages. For Adjustable Rate products under § 1026.37(a)(10)(i)(A), § 1026.37(l)(3) requires that the creditor compute the total interest percentage in accordance with comment 17(c)(1)-10. For Step Rate products under § 1026.37(a)(10)(i)(B), § 1026.37(l)(3) requires that the creditor compute the total interest percentage in accordance with § 1026.17(c)(1) and its associated commentary.

3. Negative amortization loans. For loans that have a negative amortization feature under § 1026.37(a)(10)(ii)(A), § 1026.37(l)(3) requires that the creditor compute the total interest percentage using the scheduled payment, even if it is a negatively amortizing payment amount, until the consumer must begin making fully amortizing payments under the terms of the legal obligation.

37(m) Other considerations.

37(m)(1) appraisal..

1. Applicability. The disclosure required by § 1026.37(m)(1) is only applicable to transactions subject to § 1026.19(e) that are also subject either to 15 U.S.C. 1639h or 1691(e) or both, as implemented by this part or Regulation B, 12 CFR part 1002, respectively. Accordingly, if a transaction is not also subject to either or both of these provisions, as implemented by this part or Regulation B, respectively, the disclosure required by § 1026.37(m)(1) may be omitted from the Loan Estimate as described by comment 37-1 as illustrated by form H-24 of appendix H to this part. For transactions subject to section 1639h but not section 1691(e), the creditor may delete the word “promptly” from the disclosure required by § 1026.37(m)(1)(ii).

2. Consummation. Section 1026.37(m)(1) requires the creditor to disclose that it will provide a copy of any appraisal, even if the transaction is not consummated. On form H-24, the disclosure required by § 1026.37(m)(1) states that the creditor will provide an appraisal, even if the “loan does not close.” Pursuant to § 1026.37(o)(3), the disclosure required by § 1026.37(m)(1) is that illustrated by form H-24.

37(m)(2) Assumption.

1. Disclosure. Section 1026.37(m)(2) requires the creditor to disclose whether or not a third party may be allowed to assume the loan on its original terms if the property is sold or transferred by the consumer. In many cases, the creditor cannot determine, at the time the disclosure is made, whether a loan may be assumable at a future date on its original terms. For example, the assumption clause commonly used in mortgages sold to the Federal National Mortgage Association and the Federal Home Loan Mortgage Corporation conditions an assumption on a variety of factors, such as the creditworthiness of the subsequent borrower, the potential for impairment of the creditor's security, and the execution of an assumption agreement by the subsequent borrower. If the creditor can determine that such assumption is not permitted, the creditor complies with § 1026.37(m)(2) by disclosing that the loan is not assumable. In all other situations, including where assumption of a loan is permitted or is dependent on certain conditions or factors, or uncertainty exists as to the future assumability of a mortgage loan, the creditor complies with § 1026.37(m)(2) by disclosing that, under certain conditions, the creditor may allow a third party to assume the loan on its original terms.

2. Original terms. For purposes of § 1026.37(m)(2), the imposition of an assumption fee is not a departure from the original terms of the obligation but a modification of the legal obligation, such as a change in the contract interest rate, represents a departure from the original terms.

37(m)(3) Homeowner's insurance.

1. Optional disclosure. Section 1026.37(m)(3) provides that creditors may, but are not required to, disclose a statement of whether homeowner's insurance is required on the property and whether the consumer may choose the insurance provider, labeled “Homeowner's Insurance.”

2. Relation to the finance charge. Section 1026.4(d)(2) describes the conditions under which a creditor may exclude premiums for homeowner's insurance from the finance charge. For transactions subject to § 1026.19(e), a creditor satisfies § 1026.4(d)(2)(i) by disclosing the statement described in § 1026.37(m)(3).

37(m)(4) Late payment.

1. Definition. Section 1026.37(m)(4) requires a disclosure if charges are added to an individual delinquent installment by a creditor that otherwise considers the transaction ongoing on its original terms. Late payment charges do not include: (i) The right of acceleration; (ii) fees imposed for actual collection costs, such as repossession charges or attorney's fees; (iii) referral and extension charges; or (iv) the continued accrual of simple interest at the contract rate after the payment due date. However, an increase in the interest rate on account of a late payment by the consumer is a late payment charge to the extent of the increase.

2. Applicability of State law. Many State laws authorize the calculation of late charges as either a percentage of the delinquent payment amount or a specified dollar amount, and permit the imposition of the lesser or greater of the two calculations. The language provided in the disclosure may reflect the requirements and alternatives allowed under State law.

37(m)(6) Servicing.

1. Creditor's intent. Section 1026.37(m)(6) requires the creditor to disclose whether it intends to service the loan directly or transfer servicing to another servicer after consummation. A creditor complies with § 1026.37(m)(6) if the disclosure reflects the creditor's intent at the time the Loan Estimate is issued.

37(m)(7) Liability after foreclosure.

1. When statement is not permitted to be disclosed. The disclosure described by § 1026.37(m)(7) is required under the condition specified by § 1026.37(m)(7), specifically, if the purpose of the credit transaction is a refinance under § 1026.37(a)(9)(ii). Under any other conditions, this statement is not permitted to appear in the Loan Estimate.

37(m)(8) Construction loans.

1. Clear and conspicuous statement regarding redisclosure for construction loans. For construction loans in transactions involving new construction, where the creditor reasonably expects the settlement date to be 60 days or more after the provision of the disclosures required under § 1026.19(e)(1)(i), providing the statement, “You may receive a revised Loan Estimate at any time prior to 60 days before consummation” under the master heading “Additional Information About This Loan” and the heading “Other Considerations” pursuant to § 1026.37(m)(8) satisfies the requirements set forth in § 1026.19(e)(3)(iv)(F) that the statement be made clearly and conspicuously on the disclosure.

37(n) Signature statement.

1. Signature line optional. Whether a signature line is provided under § 1026.37(n) is determined solely by the creditor. If a signature line is provided, however, the disclosure must include the statement required by § 1026.37(n)(1).

2. Multiple consumers. If there is more than one consumer who will be obligated in the transaction, the first consumer signs as the applicant and each additional consumer signs as a co-applicant. If there is not enough space under the heading “Confirm Receipt” to provide signature lines for every consumer in the transaction, the creditor may add additional signature pages, as needed, at the end of the form for the remaining consumers' signatures. However, the creditor is required to disclose the heading and statement required by § 1026.37(n)(1) on such additional pages.

3. Consumer's name. The creditor may insert the consumer's name under the signature line, rather than using the designation “Applicant” or “Co-Applicant” as illustrated in form H-24 of appendix H to this part, but is not required to do so pursuant to § 1026.37(n)(1).

37(o) Form of disclosures.

37(o)(1) general requirements..

1. Clear and conspicuous; segregation. The clear and conspicuous standard requires that the disclosures required by § 1026.37 be legible and in a readily understandable form. Section 1026.37(o)(1)(i) requires that the disclosures be grouped together and segregated from everything else. For example, creditors may not add additional pages in between the pages of the Loan Estimate, or attach to the Loan Estimate additional pages that are not provided for under § 1026.37 after the last page of the Loan Estimate. As required by § 1026.37(o)(3)(i), the disclosures for any transaction that is a federally related mortgage loan under Regulation X, 12 CFR 1024.2, must be made using the standard form H-24 of appendix H to this part. Accordingly, use of that form constitutes compliance with the clear and conspicuous and segregation requirements of § 1026.37(o). In addition, § 1026.37(o)(1)(ii) requires creditors to disclose on the Loan Estimate only the information required by § 1026.37(a) through (n), except as otherwise provided by § 1026.37(o), and in the same order, and positioned relative to the master headings, headings, subheadings, labels, and similar designations in the same manner, as shown in form H-24, set forth in appendix H to this part. For example, creditors may not use form H-24, but include in the Loan Terms table under the subheading “Can this amount increase after closing?” information that is not required by § 1026.37(b)(6).

2. Balloon payment financing with leasing characteristics. In certain credit sale or loan transactions, a consumer may reduce the dollar amount of the payments to be made during the transaction by agreeing to make, at the end of the loan term, a large final payment based on the expected residual value of the property. The consumer may have a number of options with respect to the final payment, including, among other things, retaining the property and making the final payment, refinancing the final payment, or transferring the property to the creditor in lieu of the final payment. Such transactions may have some of the characteristics of lease transactions subject to Regulation M (12 CFR part 1013), but are considered credit transactions where the consumer assumes the indicia of ownership, including the risks, burdens, and benefits of ownership, upon consummation. These transactions are governed by the disclosure requirements of this part instead of Regulation M. Under § 1026.37(o)(1)(ii), creditors may not include any additional information with the disclosures required by § 1026.37, except as provided in § 1026.37(o)(5). Thus, the disclosures must show the large final payment as a balloon payment in the projected payments table required by § 1026.37(c) and should not, for example, reflect the other options available to the consumer at maturity.

37(o)(2) Headings and labels.

1. Estimated amounts. Section 1026.37(o)(2) incorporates the “estimated” designations reflected on form H-24 of appendix H to this part into the disclosure requirements of § 1026.37, even if the relevant provision of § 1026.37 does not expressly require or permit disclosure of the word “estimate.” Where form H-24 uses the abbreviation “est.” in place of the word “estimated,” § 1026.37(o)(2) also incorporates that designation into its requirement. For example, § 1026.37(c)(2)(iv) requires disclosure of the total periodic payment labeled “Total Monthly Payment,” but the label on form H-24 contains the designation “Estimated” and thus, the label required by § 1026.37(c)(2)(iv) must contain the designation “Estimated.” Although many of the disclosures required by § 1026.38 cross-reference their counterparts in § 1026.37, § 1026.38(t) incorporates the “estimated” designations reflected on form H-25, not form H-24.

37(o)(3) Form.

1. Non-federally related mortgage loans. For a non-federally related mortgage loan, the creditor is not required to use form H-24 of appendix H to this part, although its use as a model form for such transactions, if properly completed with accurate content, constitutes compliance with the clear and conspicuous and segregation requirements of § 1026.37(o)(1)(i). Even when the creditor elects not to use the model form, § 1026.37(o)(1) requires that the disclosures be grouped together and segregated from everything else; contain only the information required by § 1026.37(a) through (n); and be provided in the same order as they occur in form H-24, using the same relative positions of the headings, labels, and similar designations as shown in the form. In addition, § 1026.37(o)(2) requires that the creditor include the designation of “estimated” for all headings, subheading, labels, and similar designations required by § 1026.37 for which form H-24 contains the “estimated” designation in such heading, subheading, label, or similar designation. The disclosures required by § 1026.37 comply with the requirement to be in a format substantially similar to form H-24 when provided on letter size (8.5″ x 11″) paper.

37(o)(4) Rounding.

1. Rounding. Consistent with § 1026.2(b)(4), except as otherwise provided in § 1026.37(o)(4), any amount required to be disclosed by § 1026.37 is not permitted to be rounded and is disclosed using decimal places where applicable, unless otherwise provided.

2. Calculations. If a dollar amount that is required to be rounded by § 1026.37(o)(4)(i) on the Loan Estimate is a total of one or more dollar amounts that are not required or permitted to be rounded, the total amount must be rounded consistent with § 1026.37(o)(4)(i), but such component amounts used in the calculation must use such unrounded numbers. In addition, if any such unrounded component amount is required to be disclosed under § 1026.37, consistent with § 1026.2(b)(4), it should be disclosed as an unrounded number. If an amount that is required to be rounded by § 1026.37(o)(4)(i) on the Loan Estimate is a total of one or more components that are also required to be rounded by § 1026.37(o)(4)(i), the total amount must be calculated using such rounded amounts. For example, the subtotals required to be disclosed by § 1026.37(f)(1), (2), and (3) are calculated using the rounded amounts disclosed under those subsections. See also comment 37(o)(4)(i)(C)-1. However, the amounts required to be disclosed by § 1026.37(l) reference actual amounts for their components, rather than other amounts disclosed under § 1026.37 and rounded pursuant to § 1026.37(o)(4)(i), and thus, they are calculated using unrounded numbers.

37(o)(4)(i) Nearest dollar.

Paragraph 37(o)(4)(i)(a)..

1. Rounding of dollar amounts. Section 1026.37(o)(4)(i)(A) requires that certain dollar amounts be rounded to the nearest whole dollar. For example, under § 1026.37(o)(4)(i)(A), periodic mortgage insurance payments are rounded and disclosed to the nearest dollar, such that a periodic mortgage insurance payment of $164.50 is disclosed under § 1026.37(c)(2)(ii) as $165, but a periodic mortgage insurance payment of $164.49 is disclosed as $164. The per-diem amount disclosed under § 1026.37(g)(2)(iii) and the monthly amounts for the initial escrow payment at closing disclosed pursuant to § 1026.37(g)(3)(i) through (iii) and (v) do not include partial cents. Dollar amounts are rounded or truncated to the nearest whole cent. For example, under § 1026.37(g)(2)(iii), the creditor discloses per-diem interest of $68.1254 as $68.13 or $68.12. See form H-24(B) in appendix H to this part for an illustration of per-diem amounts for homeowner's insurance disclosed pursuant to § 1026.37(g)(3)(i).

Paragraph 37(o)(4)(i)(B).

1. Rounding of loan amount. Section 1026.37(o)(4)(i)(B) requires the loan amount to be disclosed truncated at the decimal place if the loan amount is a whole number. For example, if § 1026.37(b)(1) requires disclosure of a loan amount of $481,516.23, the creditor discloses the amount as $481,516.23. However, if the loan amount required to be disclosed were $481,516.00, the creditor would disclose $481,516.

Paragraph 37(o)(4)(i)(C).

1. Rounding of the total monthly payment. Section 1026.37(o)(4)(i)(C) requires the total monthly payment amount disclosed under § 1026.37(c)(2)(iv) to be rounded if any of its components are rounded. For example, if the total monthly payment disclosed under § 1026.37(c)(2)(iv) is composed of a $2,000.49 periodic principal and interest payment required to be disclosed by § 1026.37(c)(2)(i) and a $164.49 periodic mortgage insurance payment required to be disclosed by § 1026.37(c)(2)(ii), the creditor would calculate the total monthly payment by adding the exact periodic principal and interest payment of $2,000.49 and the rounded periodic mortgage insurance payment of $164, round the total, and disclose $2,164.

37(o)(4)(ii) Percentages.

1. Decimal places. Section 1026.37(o)(4)(ii) requires the percentage amounts disclosed rounding exact amounts to three decimal places, but the creditor does not disclose trailing zeros to the right of the decimal point. For example, a 2.4999 percent annual percentage rate is disclosed as “2.5%” under § 1026.37(o)(4)(ii). Similarly, a 7.005 percent annual percentage rate is disclosed as “7.005%,” and a 7.000 percent annual percentage rate is disclosed as “7%.”

37(o)(5) Exceptions.

1. Permissible changes. The changes required or permitted by § 1026.37(o)(5) are permitted for federally related mortgage loans for which the use of form H-24 is required under § 1026.37(o)(3). For non-federally related mortgage loans, the changes required or permitted by § 1026.37(o)(5) do not affect the substance, clarity, or meaningful sequence of the disclosure and therefore, are permissible. Any changes to the disclosure not specified in § 1026.37(o)(5) or not permitted by other provisions of § 1026.37 are not permissible for federally related mortgage loans. Creditors in non-federally related mortgage loans making any changes that affect the substance, clarity, or meaningful sequence of the disclosure will lose their protection from civil liability under TILA section 130.

2. Manual completion. Section 1026.37(o) does not require the creditor to use a computer, typewriter, or other word processor to complete the disclosure form. The information and amounts required to be disclosed by § 1026.37 on form H-24 of appendix H to this part may be filled in by hand printing or using any other method, provided the information is clear and legible and complies with the formatting required by form H-24, including replicating bold font where required.

3. Contact information. If a transaction involves more than one creditor or mortgage broker, the space provided on form H-24 of appendix H to this part for the contact information required by § 1026.37(m) may be altered to add additional labels to accommodate the additional information of such parties, provided that the information required by § 1026.37(l), (m), and (n) are disclosed on the same page as illustrated by form H-24. If the space provided on form H-24 of appendix H to this part does not allow for the disclosure of such contact and other information on the same page, an additional page may be added to provide the required contact information with an appropriate reference to the additional page.

4. Unit-period. Section 1026.37(o)(5)(i) provides that wherever form H-24 or § 1026.37 uses “monthly” to describe the frequency of any payments or uses “month” to describe the applicable unit-period, the creditor is required to substitute the appropriate term to reflect the fact that the transaction's terms provide for other than monthly periodic payments, such as bi-weekly or quarterly payments. For purposes of § 1026.37, the term “unit-period” has the same meaning as in appendix J to Regulation Z.

5. Additional page. Information required or permitted to be disclosed by § 1026.37 on a separate page should be formatted similarly to form H-24 of appendix H to this part, so as not to affect the substance, clarity, or meaningful sequence of the disclosure. In addition, information provided on additional pages should be consolidated on as few pages as necessary to not affect the substance, clarity, or meaningful sequence of the disclosure.

6. Translation. Section 1026.37(o)(5)(ii) permits the translation of form H-24 into languages other than English, consistent with § 1026.27. Pursuant to § 1026.37(o)(5)(ii) creditors may modify form H-24 to the extent that translation prevents the headings, labels, designations, and required disclosure items under § 1026.37 from fitting in the space provided on form H-24. For example, if the translation of a required label does not fit within the line provided for such label in form H-24, the label may be disclosed over two lines. See form H-28 of appendix H to this part for Spanish translations of form H-24.

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Real Estate Transfer Tax Calculator | Chicago metro area

Chicago real estate transfer tax calculator

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Real estate transfer taxes are fees that the state, counties, and local municipalities charge buyers and sellers when transferring property ownership.

Use our real estate transfer tax calculator to see how much these taxes cost when buying or selling a home in the Chicago metro area.

How much are the state and county transfer taxes?

In Illinois, property sellers, not home buyers, pay the state and county real estate transfer tax.  

The state charges sellers $1.00 per $1,000.00 of the property's sales price. To calculate the Illinois tax, multiply the sales price by 0.10%.

All Illinois counties, including Cook, DuPage, Kane, Lake, McHenry, and Will, charge  $0.50 per $1,000.00 . To calculate the county tax, multiply the property's sales price by 0.05%.

Someone selling a condo in Chicago for $500,000 pays $500 to Illinois and $250 to Cook County. 

  •    $500,000 sales price 
  • x 0.10% state tax = $500 Illinois transfer tax   
  • x 0.05% county tax = $250 Cook County transfer tax 

How much are city transfer taxes in the Chicago metro area?

Municipal transfer tax rates vary based on several factors, including the property's sale price, location, and whether you're buying or selling. Taxes range from $0.00 to $10.00 per $1,000.00 of the property's sales price.

For example, Wilmette charges buyers a transfer tax, neighboring Evanston collects from sellers, and Chicago taxes buyers and sellers.

In the last section of this article, you'll find a list of the municipal real estate transfer taxes in the Chicago metro area.

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How much is Chicago's city transfer tax?

Chicago charges $10.50 per $1,000.00 for real estate sold within city limits. Buyers and sellers each pay a portion of the tax. The buyer pays $7.50 per $1,000.00, and the seller pays $3.00 per $1,000.00.

The total tax is 1.05% of the property's sales price. The buyer's share is 0.75%, and the seller's share is 0.3% of the sales price.

To calculate the buyer's Chicago transfer tax, multiply the sales price by 0.75%.

If you buy a home for $500,000

  •    $500,000 sales price
  • x 0.75% buyer's tax
  • = $3,750.00 amount the buyer pays 

To calculate the seller's Chicago transfer tax, multiply the property's sales price by 0.3%. 

If you sell a home for $500,000

  •    $500,000.00 sales price
  • x 0.3% seller's tax 
  • = $1.500.00 amount the seller pays 
  • Chicago Real Property Transfer Tax

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Real estate transfer tax calculator

Our real estate transfer tax calculator is a simple tool that helps home buyers, and sellers estimate the transfer taxes they may owe when buying or selling property in the Chicago metro area.

First, enter the property's city and sales price. Next, calculate the city, county, and state real estate transfer tax amounts. Then, double-check with the city, county, and state to confirm the taxes and fees. 

City: Addison Alsip Arlington Heights Aurora Bartlett Bedford Park Bellwood Berkeley Berwyn Bolingbrook Brookfield Buffalo Grove Burbank Burnham Calumet City Calumet Park Carol Stream Channahon Chicago Chicago Heights Cicero Country Club Hills Countryside Des Plaines Dolton East Hazel Crest Elgin Elk Grove Village Elmhurst Elmwood Park Evanston Evergreen park Forest Park Franklin Park Freeport Glencoe Glendale Heights Glen Ellyn Glenwood Hanover Park Harwood Heights Highland Park Hillside Hoffman Estates Joliet Justice Lake Forest Lansing Lincolnshire Lincolnwood Lyons Markham Matteson Melrose Park Midlothian Monee Montgomery Morton Grove Mount Prospect Naperville Niles Norridge North Chicago North Riverside Northlake Oak Forest Oak Lawn Oak Park Orland Park Palatine Park Forest Park Ridge Peoria Posen River Forest River Grove Riverdale Riverside Robbins Rolling Meadows Romeoville Schaumburg Skokie South Holland Stone Park Streamwood Stickney Sycamore University Park Villa Park Wauconda Waukegan West Chicago Westchester Wheeling Wheaton Wilmette Woodridge Worth

Sales price:

Buyer pays:  

Seller pays:  

Closing cost calculator with real estate transfer taxes

Use our  mortgage calculator  to see how much money you need to buy a home. View current interest rates, monthly payments, closing costs, and transfer taxes. 

Run as many scenarios as you like as you plan for your significant purchase. Change the sales price, down payment , and loan type, and get the loan details upfront so you know what to expect.

View current rates

Where are transfer taxes on the Loan Estimate?

The Loan Estimate is a form the lender sends you after applying for a mortgage. It details the mortgage costs, including the real estate transfer taxes.

To ensure the transfer taxes are correct, check the Sales Price on Page 1 of the Loan Estimate.

Loan Estimate Sales Price

Then, review the Transfer Tax amount on Page 2, Section E. Taxes and Other Government Fees.

Loan Estimate Transfer Tax

The Closing Disclosure is the form the lender sends you at least three business days before closing. It lists the final numbers for your home loan, including the transfer taxes you pay at closing. 

Use our free  mortgage calculator  to see your closing costs, including the real estate transfer tax, so you know how much money you need to buy a home.

How do I pay the real estate transfer tax? 

Home buyers and sellers pay transfer taxes at closing, the final step in buying a home. Before closing, the lender gives you a bottom line, the amount of cash you need to close. Cash-to-close includes the amount you owe for real estate transfer taxes.

Next, set up a wire transfer or make a cashier's check payable to the title company overseeing the closing. Then, after signing the loan documents at closing, the title company exchanges funds completes the transaction and pays taxes due to the city, county, and state.

List of real estate transfer taxes for the Chicago metro area 

The following table lists the real estate transfer taxes in the Chicago metro area. 

Please note that the government may change the real estate transfer tax rates, so double-check with the city, county, and state to confirm that the taxes and fees are correct. 

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How to read and compare mortgage loan estimates

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Most people shopping for a home also need to obtain a mortgage to finance the purchase. The mortgage loan estimate is a document that spells out many of the key terms and costs of the mortgage offer.

There’s more to a mortgage offer than the lump sum they’ll let you borrow. It’s also important to realize that a loan estimate is just that: an estimate. So, if you are mortgage shopping, you should familiarize yourself with the key components of this document and ensure you know how to read a mortgage loan estimate. Read on to discover the key details and how to compare loan estimates to get the best mortgage for your needs.

What is a loan estimate?

A loan estimate is a standardized, three-page document from a lender containing details about a mortgage intended to help homebuyers compare offers.

While the information in the document is a good-faith estimate — in other words, not final — a mortgage loan estimate is designed to give the homebuyer a comprehensive overview of the costs they will incur so they can prepare and budget appropriately.

“This helps a buyer to understand, at the beginning of the process, the estimated cost of the transaction,” says Stephanie McAllister, a senior mortgage consultant at Prosperity Home Mortgage in Atlanta, Georgia.

What is included in your mortgage loan estimate?

You can count on your loan estimate for a mortgage to include the following key numbers:

  • Interest rate
  • Detailed closing costs
  • Prepaid interest
  • Third-party fees
  • Escrow expenses
  • Detailed monthly payment estimate

The good news is that loan offers are somewhat easy to compare because all lenders are required to use the same loan estimate document, a standard that was implemented by the Dodd-Frank Act of 2010.

“Similar to nutrition labels, loan estimates are legally required to look identical across all lenders,” says Emanuel Santa-Donato, senior vice president at Tomo, a Stamford, Connecticut-based mortgage-lending fintech startup. “That way, it’s easy for you to compare loan offers and harder for lenders to hide fees.”

When will I get the mortgage loan estimate?

Within three days of applying for a mortgage , your lender must provide you with a loan estimate. If this is your first time trying to qualify for a mortgage, you’ll need to gather the following information and documentation in preparation for the application process : your legal name, proof of income, Social Security number, desired loan amount, address of the property you  want to finance and its list price.

How to read your mortgage loan estimate

You’ll receive a loan estimate whether you’re purchasing a home or refinancing. In either case, you should use the document as a guide for budgeting and for comparing loan estimates from various lenders.

Here’s a page-by-page loan estimate example with a breakdown of what a loan estimate contains (visuals courtesy of the Consumer Finance Protection Bureau , which is an example of a loan estimate on the standardized form).

Loan estimate example: page 1

lightbox image

The first page of the loan estimate outlines three general terms of the mortgage, including:

  • Terms of your loan
  • Your projected payments
  • Closing costs

These details will give you a good idea of how much the loan will cost you. For instance, in section No. 1, notice the following information:

  • Loan term – The number of years it will take you to pay off the mortgage
  • Purpose – If the loan is to purchase or to refinance a home
  • Product – Whether the mortgage is fixed – or adjustable-rate
  • Loan type – Whether the mortgage is a conventional loan or some other type, such as an FHA or VA loan
  • Rate lock – If the lender has locked the interest rate and when that lock expires

In section No. 2 above, you’ll learn more about the:

  • Loan amount – How much you’re borrowing and whether it can be increased or not
  • Interest rate – The percentage interest rate you’ll pay, and if it is fixed for the life of the loan or will adjust (and under what terms)
  • Monthly principal and interest – The total you can expect to pay for your mortgage payment monthly, not including your homeowners insurance and property taxes
  • Prepayment penalty – Stipulates if your lender charges a fee, called a prepayment penalty, if you choose to pay down the mortgage more quickly or pay it off entirely before the original loan term ends
  • Balloon payment – A large lump sum you’ll pay when the loan term ends. Your loan estimate will tell you if there is a balloon payment and how much it is

In sections No. 3 and No. 4 above, you’ll find an overview of your payments and costs.

  • Payment calculation – This is a breakdown of what you’ll pay monthly, a total that includes principal and interest, any escrow payments or private mortgage insurance (PMI) premiums, if applicable
  • Estimated total monthly payment – This totals up the different components detailed above that go into your estimated regular mortgage payments
  • Estimated taxes, insurance and assessments – You’ll get an estimate of how much your homeowners insurance and property taxes will cost, as well as what funds will be held in escrow
  • Estimated closing costs – A total of the various components of your mortgage closing costs
  • Estimated cash to close – Includes closing costs plus any additional money you’ll have to pay upfront, including the down payment on the property, earnest deposit and any seller concessions or credits

Page one also includes the applicant’s name, the date of the loan estimate, the home’s address and the property’s price.

On page one, “You should make sure the interest rate and loan amount listed match what you selected or discussed with the lender,” says Santa-Donato.

Loan estimate example: page 2

lightbox image

The second page of your loan estimate, “Closing Cost Details,” also contains three components:

  • Other costs
  • Calculating cash to close

This page is where you get a line-by-line breakdown of all your mortgage costs, including provider fees for required services such as the appraiser , along with costs for third-party-provided services such as title insurance . The form will delineate which of these you have the option of shopping around for so you can find the best price.

Under “Loan costs,” you get a breakdown of the following services along with their costs in the left-hand column:

  • A: Origination charges – Your lender charges a fee for initiating the mortgage, which can include charges for the application and other services, plus any mortgage points you’re buying upfront to lower your interest rate.
  • B: Services you cannot shop for – This details the services you’re required to pay for to close the mortgage, such as an appraisal and a credit check, along with what those services cost.
  • C: Services you can shop for – This is a list of additional required services, such as a  property survey and title search, and how much they cost. The difference between this and the list above is that you have the option of shopping around and comparing providers.
  • D: Total loan costs – This is the total sum of parts A, B and C.

Section No. 6 details other miscellaneous costs and charges. These include:

  • E: Taxes and other government fees – This part of the estimate includes fees for recording the mortgage with the city or county as well as, if applicable, property transfer taxes.
  • F: Prepaids – A category that comprises costs like homeowners insurance premiums, mortgage insurance premiums and property taxes.
  • G: Initial escrow payment at closing – You have to pay upfront for the items that will go in escrow, including your first homeowners insurance premiums and property taxes.
  • H: Other – This includes any extra additional and sometimes optional costs such as an owner’s title insurance policy.
  • I: Total other costs – The sum of parts E, F, G and H.
  • J: Total closing costs – The sum of parts D and I.

The final section on the second page of the loan estimate, “Calculating cash to close,” provides a breakdown of each and every cost you’ll have to pay at the closing, including the down payment and total closing costs calculated in part J of the estimate document. This is the full estimated amount of cash you’re required to have on hand when you close on your mortgage.

Loan estimate example: page 3

lightbox image

The final page of the loan estimate lists the most important details of your mortgage agreement, like the names of the lender and the loan officer, plus three key figures you can use for comparison shopping in section No. 8 as shown above:

  • Amount of the loan principal you will have paid off after the first five years of your mortgage term, as well as the combined principal, interest and (when applicable) mortgage insurance costs
  • Annual percentage rate, or APR , which is the combined cost you will pay over the entire loan term, expressed as a rate (not your interest rate)
  • Total interest percentage, or TIP, which is the amount of interest you’ll pay over the term of the loan, calculated as a percentage

The final page also explains other parts of the mortgage payment process and your responsibilities as the borrower. This spells out, for instance, your appraisal and homeowners insurance requirements, whether or not the loan can be assumed by the next owner of the property, plus any late payment penalties and whether the loan will be serviced by the lender or sold to a separate entity that will service it.

How to compare mortgage loan estimates

Knowing how to compare mortgage loan estimates is critical to obtaining the best loan possible. If you’re comparing offers between two or more lenders, pay attention to where the estimates differ on the interest rate, origination charges and points. You’ll also want to compare the bottom line of the estimated monthly payment and the estimated cash-to-close amount to determine which mortgage offer best fits your needs.

You should focus on the numbers in parts A and B where you’ll find the information about origination charges and fees for the services for which you can’t shop around.

It’s important to use these numbers to compare loan estimates for a mortgage because they vary by lender and have a significant impact on both the amount of your monthly payment and how much cash due at closing you’ll need, Santa-Donato says. “The other charges and prepaid amounts, while important in your overall cash-to-close, have little to no variation between lenders,” he says.

Where you do have the opportunity to shop around for a better deal is on the service fees outlined in part C. Keep in mind while you’re comparison shopping that your lender might have partnerships with some of these service providers that include a preferential rate.

Other things to keep an eye out for, according to Santa-Donato, include:

  • Any third-party fees that appear in one lender’s loan estimate and not another’s
  • If any credits you were promised verbally after closing don’t appear on the loan estimate
  • If you could incur an increase in costs if your employment, income or other circumstances change

If you’re refinancing, Santa-Donato says that borrowers should take note of any differences in the loan amount between lenders. Be particularly wary of mortgages advertised as no-closing-cost loans, because lenders can increase the loan amount to cover those costs, which increases your total debt load.

“Borrowing a little more than the payoff on your current loan is one way to offset fees at the closing table, but this is increasing your debt to pay for your closing costs,” says Santa-Donato. To really compare mortgage offers on an apples-to-apples basis, “You should get loan estimates with identical loan amounts,” he says.

It’s crucial to know how to compare loan estimates and to read your loan estimate in detail, asking as many questions as you need to understand it fully and raise any concerns with the lender. Mortgage experts also advise borrowers, especially first-time homebuyers, to engage a professional who can walk them through their loan estimates and explain anything they don’t understand.

Article sources

We use primary sources to support our work. Bankrate’s authors, reporters and editors are subject-matter experts who thoroughly fact-check editorial content to ensure the information you’re reading is accurate, timely and relevant.

“ When Rates Are Higher, Borrowers Who Shop Around Save More ” Freddie Mac. Accessed on Sept. 26, 2023.

“ What is a Loan Estimate? ” Consumer Financial Protection Bureau. Accessed on Sept. 26, 2023.

“ Loan Estimate Explainer ” Consumer Financial Protection Bureau. Accessed on Sept. 26, 2023.

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A NY Homeowner’s Guide to CEMA Loans

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What is a CEMA Loan?

CEMA stands for Consolidation, Extension and Modification Agreement—and is essentially a way to refinance but avoid paying an expensive mortgage recording tax.

CEMAs are used instead of a traditional refinance but they accomplish similar refinancing goals—such as lowering the interest rate, changing the loan term, or accessing cash through the equity in the home (like a cash-out refinance). However, unlike a traditional refinance, the existing debt obligation (the loan you’re refinancing) is not satisfied and replaced with a new loan but rather modified into a new loan or a CEMA.

By opting for a CEMA as opposed to a refinance, you avoid paying the mortgage recording tax on your current loan balance by consolidating the new loan into the existing one. That means you would only pay the recording tax on the difference between the existing principal balance and the new loan amount.

The NY mortgage recording tax

New York State imposes a tax for recording a mortgage on property within the state. The recording tax applies to both purchases and refinances but excludes co-ops. It typically is about 1–2% of your loan amount, which can significantly increase your closing costs.

Homeowners who look to refinance their loans typically have to pay the mortgage recording tax. However, there is an alternative to refinancing that can significantly reduce closing costs and the tax burden—a CEMA loan.

For Example: Mary owns a home valued at $1,000,000 and owes $200,000 on her mortgage. She wants to access $50,000 of equity from her home and wants to get a cash-out refinance, making her new loan balance $250k. Assuming Mary’s mortgage recording tax is 2%, with a CEMA she will be paying mortgage tax only on the $50k (or $1,000 in taxes). If she does a refinance, she’ll be paying mortgage tax on the entire new loan balance of $250k (or $5,000 in taxes).

How to get a CEMA

After you complete a refinance application with Better Mortgage, your application is automatically converted into a CEMA.

Prior to locking your rate, we encourage you to speak with your Loan Officer to confirm that a CEMA is right for you and evaluate your options.

Once you lock your interest rate, Better Mortgage’s bank attorney will reach out to you within ~3 business days to confirm any CEMA savings and determine if you’d like to proceed with a CEMA, thereby beginning the process.

Note: There is no additional cost incurred from switching between a CEMA and a refinance within the first week after locking and no impact to your interest rate depending on the product you choose.

Our bank attorney will send documentation to your current loan servicer for their review and approval, a requirement to obtaining a CEMA

Our bank attorney will be in touch with you once they hear back from your current lender on the CEMA approval status - about 2-6 weeks from submission (depending on your lender)

CEMA versus Refinancing

There are two main considerations when deciding between a CEMA and a traditional refinance—cost and time.

At Better Mortgage, your Loan Officer will work with you to do a preliminary analysis to see if a CEMA or a refinance is more cost effective. Once your loan is locked, our bank attorney will get in touch with you to confirm any savings. If you change your mind after you lock, you’re able to go between CEMA and refinance at no cost.

Dependent on your existing lender fees for obtaining a CEMA, fees average ~$2,000. If the amount of savings on taxes significantly exceeds the cost of the CEMA fees, it may make sense to pursue a CEMA.

In areas where mortgage recording tax is high, such as New York City and the immediate surrounding area, a CEMA is usually more cost effective.

A CEMA also comes with additional requirements, namely getting your current lender’s approval—which means more time is needed to close. A traditional refinance on average takes ~30 days to close whereas a CEMA usually takes ~75 days to close. If you’re in a hurry to refinance, it may make sense to bypass a CEMA.

Understanding the CEMA on your Loan Estimate

You can apply and lock a rate even if your current lender hasn’t approved your CEMA application. Until your CEMA is fully approved, the mortgage taxes will appear on your Loan Estimate as part of the Transfer Taxes under Section E. We keep the mortgage taxes on your Loan Estimate to ensure transparency on potential incurred costs until a final loan product is confirmed.

CEMA LOANS

In addition to the mortgage recording tax, we also include the fixed CEMA fee under Section B, which represents the cost to execute the CEMA. You’ll see that the fee is not reflective of the total average amount (~$2,000) since a large portion will be paid directly to your lender—by you. A Better Mortgage bank attorney will help facilitate the payment to ensure a smooth and transparent process, but it will not be included on your Loan Estimate.

CEMA LOANS 2

The Loan Estimates displayed above are for illustrative purposes only.

This means your Loan Estimate currently reflects some of the costs of the CEMA but does not reflect the benefits of a CEMA. You will not pay this cost if you do not end up getting a CEMA loan (and the associated reduction in your mortgage tax).

As soon as we confirm your CEMA has been approved, we will remove the mortgage recording tax from Section E, and your closing costs will reduce by that amount. Please note there are other fees bundled into “transfer taxes” so the entire “transfer tax” line item does not represent your potential savings. If you would like a better understanding of your potential CEMA savings, your Loan Officer will be able to provide a preliminary estimate, which will be confirmed by our bank attorney after you lock.

If your CEMA is not approved, Section E will remain the same but the CEMA fees from Section B will be removed, reducing your closing costs.

What happens if the CEMA is not approved?

In the event your CEMA is not approved, our team will help you achieve your refinancing goals via a traditional refinance. Our Loan Officers are here to walk you through this decision.

Why does Better Mortgage automatically opt me into a CEMA?

Better Mortgage is constantly looking for ways we can benefit our borrowers. Because CEMAs are typically more cost effective for borrowers than a traditional refinance, we automatically opt you in. As a result, we’re able to start the approval process with your existing lender quicker to determine the savings potential and give you a clear sense of time to close.

Can I opt out of a CEMA?

Yes, if you’d prefer to opt out, let your Loan Officer know.

Ready to find your perfect home in New York?

Get pre-approved in as little as 3 minutes when you apply for a loan on better.com . And if you’re on the hunt for the right property, Better Real Estate is here to help—plus, you can save on closing costs when you work with one of our agents.

This publication is designed to provide general information. It is not intended to provide, and should not be relied upon, for tax, legal or other financial advice.

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The Affordable Homes Act - Transfer Fee Analysis

Learn more about how much the local option transfer fee might raise for local housing initiatives

The Affordable Homes Act includes a provision that would grant Massachusetts municipalities the authority to implement a real estate transfer fee of 0.5% to 2.0% on transactions or more than $1M or the county median single family home price, whichever is greater. This page summarizes EOHLC's revenue estimates, a breakdown by county and municipality, and a summary of research on the effects of transfer fees.  

Table of Contents

Revenue estimates.

To estimate potential revenue generation, EOHLC relied on transaction data from the Warren Group, which was processed and provided in summary format by PFM, a consulting group conducting a state-funded study of excise and transfer fees in Massachusetts. The data provided by PFM covers the state’s fiscal year 2022 (July 1, 2021 to June 30 2022.) PFM verified the accuracy of this data by comparing it to the current deeds excise tax revenue figures from State Auditor’s FY22 “ Determination of Whether Net State Tax Revenues Exceeded Allowable State Tax Revenues .” This comparison found that the total sales volume in the data used by PFM was within 0.1% of the sales volume implied by the excise tax collections.

PFM provided EOHLC with a database of transaction counts and total dollar amounts (aka “volume”) by municipality and property type, and grouped into 18 “price bins” for sales within a specified range (e.g., $800K - $899K, $900K - $999K, etc). This database includes information about 117,229 transactions during FY22, of which 91% were classified as residential (single family and 2-3 family homes), 5.4% were classified as commercial (including industrial and apartment buildings of 4+ units), and 3.6% were unclassified. 

In order to determine the exemption thresholds applicable in each county, EOHLC used 2021 median sale prices from Warren Group , shown in the table below.     

Transfer Fee Exemption Thresholds, 2021

Based on the above exemption thresholds, EOHLC determined which price bins   would be subject to the transfer fee for each municipality and county. For most counties, the threshold is an even $1M, which is also the threshold between the price bins of $900K - $999K and $1M to $1.5M. For Dukes and Nantucket Counties, where the threshold falls in the middle of a bin, we assumed a uniform distribution of sales within the price bin and pro-rated the count of qualifying transactions and transaction volume accordingly. Exempted volume was calculated for each price bin by multiplying the qualifying transactions times the exemption amount. The result was subtracted from total sales volume for that price bin to determine total transaction amount subject to the tax. This was multiplied by 0.01 to determine potential revenue raised by a 1% levy for each price bin and transaction type.

EOHLC estimates that 17,298 transactions – 14.8% of the total – could have been subject to the proposed transfer fee in FY2022 if it was universally applicable at the time. This includes 13.4% of all residential transactions (14,332 sales), 34.1% of commercial transactions (2,253 sales) and 12.8% of unclassified transactions (540 sales.)  It should be noted that transactions that would have been exempt from the tax (e.g. transactions between government entities, between family members, pursuant to divorce) are not excluded from this analysis; however, it is likely that the number of such transactions is relatively small and their removal would not significantly affect the revenue estimates. 

EOHLC estimates that if the transfer fee had been in place in all 351 cities and towns of Massachusetts in FY22, it could have raised $392M  for each 1% levied. The chart below shows how this potential revenue breaks down by county and transaction type. Universal adoption of a 2% levy in FY22 would have raised an estimated $784M.

Transactions in Middlesex, Suffolk, and Norfolk County would generate more than 2/3 of the statewide revenue from a transfer tax: $271M out of the total $392M potential revenue. Meanwhile, Berkshire, Franklin, and Hampshire Counties would collectively generate only $5.4M annually, due to the much smaller number of transactions and smaller share of transactions over $1M.   

Statewide, about half (52%) of the revenue would be collected from commercial transactions (including sales of apartment buildings with 4+ units). 34% of the estimated revenue is from small residential transactions (1-3 family homes), and 14% is from transactions that are unclassified in the available data. This balance varies widely across the counties. For example, Middlesex County revenue is 62% commercial transactions, whereas Suffolk County is only 39% commercial (with a higher share of unclassified transactions). Counties with a notably high share of revenue from commercial transactions include Franklin (88%), Hampden (84%), Bristol (74%) and Worcester (71%). Meanwhile, In Dukes and Nantucket County, almost 90% of the revenue is from residential transactions.  

The map below shows estimated transfer tax revenue by municipality, for each 1% levy

This map shows a wide variety in potential revenue. 53 municipalities in Central and Western MA had zero transactions above the exemption threshold. Another 96 municipalities would have raised less than $100,000 in FY22 for each 1% levied. Meanwhile, 84 municipalities would have raised more than $1M in FY22, including a dozen that would have raised between $5M and $10M.  Revere and Somerville could have raised $10M - $12M, Cambridge could have raised $28M, and Boston could have raised $70M with a 1% levy.   

The balance of residential to commercial transactions as the source of transfer fee revenue varies widely as well. The map below shows the percentage of potential revenue coming from residential vs commercial transactions. In the municipalities colored red, the vast majority of revenue comes from commercial transactions; those in green would get the vast majority of revenue from residential transactions. The tan municipalities, such as Boston, have a relatively even split between commercial and residential revenue. (Unclassified transactions are excluded from these statistics). 

Effective Tax Rates and Comparison to other Taxes

The transfer fee applies only to the transaction value above the exemption threshold.  As a result, sales just above the thresholds will have very little value subject to the tax. For example, if a home is sold for $1.2M, only $200,000 will be subject to the tax; a nominal 1% levy would result in a fee of $2,000, an effective tax rate of only 0.17%. The effective tax rate increases as the transaction amount increases, resulting in a highly progressive tax structure. The chart below shows the effective tax rate of a 1% levy on transactions of each type for FY 2022.

Based on the distribution of transaction amount for FY2022, EOHLC estimates that a 1% levy would result in an average effective tax rate of only 0.47% for all residential transactions over $1M. Since commercial transactions tend to have a higher transaction amount, a 1% levy would result in an average effective tax rate of 0.89% for commercial transactions over $1M.

EOHLC also found that the cost of the transfer tax would be less than a single year of property tax for the vast majority of commercial properties. The median FY23 property tax rate for commercial and industrial properties in Massachusetts is 1.55%. The commercial/industrial tax rate exceeds 2.0% in 78 municipalities, including major cities and job centers such as Boston (2.47%), Somerville, Framingham, Worcester, Marlborough, Framingham, Waltham, Burlington, Andover, Dedham, and Springfield. Even at the maximum transfer tax rate (2%), the amount levied would be less than the next year’s worth of property taxes for the vast majority of properties transacted.

Evidence about the effect of transfer fees

Massachusetts already has a statewide transfer fee, known as the Deeds Excise Tax, which is assessed at a rate of 0.456% of the total value of the transaction. Transfer taxes are levied across two-thirds of US states and many cities, though their form varies widely and their effects have not been studied extensively. Here we examine the literature and its implications for the proposed transfer fee. 

One valuable point of comparison is the so-called “mansion tax” in New York state (since 1989) and New Jersey (since 2004) that applies to residential transactions of $1 million or more (and which is generally paid by the seller). Unlike the transfer tax proposed in the AHA, the 1% mansion tax is imposed on the full value of the transaction, so that a $1 million sale is subject to a $10,000 tax liability, while a $999,999 transaction is not subject to the tax at all. An analysis by researchers from Columbia University found that this discontinuity in tax liability creates a ‘cliff effect’ that causes substantial market distortions. There are more sales than expected at prices just below $1M, and an even greater number of “missing” sales at prices just over $1M. As the authors put it, the market “unravels” in the neighborhood of the eligibility threshold, resulting in an estimated 0.7% decline in the total number of residential transactions. These findings validate the AHA’s approach of a marginal transfer fee that applies only to the amount above the threshold. While a tax that applies to the full amount might raise additional revenue, it creates substantial market distortions and lost revenue due to transactions that don’t occur. 

That same analysis of New York and New Jersey found that sales above $1M showed greater price discounts compared to their initial listing price than did sales below $1M, on the order of 1-2%. One explanation may be that sellers adjust their asking prices to cover the cost of the tax, but are unable to find buyers willing or able to pay the elevated price. This would suggest that the cost of the tax is effectively born by the seller. Evidence from Toronto, Germany, and Australia suggests that even when transfer fees are paid by the buyer , the tax burden largely falls on the seller . (From the Toronto study: “Our data show that Toronto’s 1.1% tax caused…a decline in housing prices about equal to the tax.”; from the Australian study: “the impact of an increase in the tax rate is to lower house prices, suggesting that the economic incidence of the tax falls on the seller.”) These findings rebut the argument that a transfer fee will drive up prices for residential buyers, who in this incredibly tight market are already paying as much as they can bear.

The studies of Toronto, Germany, and Australia also found that transfer tax tends to reduce the number of real estate sale transactions. Estimates of the reduction vary, generally ranging from 7 to 15% for each 1% fee. This could be caused by a reduction in residential mobility (people choosing not to move in order to avoid the tax); by investors choosing to defer sales due to reduced profit; or due to tax avoidance schemes (e.g., transferring controlling interest in a corporate owner of the property rather than selling the real property itself.) Where the tax is applied to all transactions, a decrease in residential mobility could be cause for serious concern; but if applied only to high-value transactions, the reduction in sales only affects the highest-income households. 

Robust empirical analysis of the effects of transfer taxes on commercial transactions is even harder to come by. The San Francisco Comptroller’s analysis of a proposed increase in the transfer fee for sales over $5M speculated that an increase in the fee would not only reduce the number of transactions, but would “reduce the amount that a buyer would be willing to offer for a property, because he or she will face the higher tax liability when selling the property in the future.” As a result, it will have a tendency to discourage acquisitions made with the intent of short-term resale. In the residential real estate market, where investor activity is crowding out options for individual sales and corporate purchase of multifamily properties is creating instability for long-term tenants, a reduction in investor purchases may actually provide benefits for some segments of renters and would-be homeowners.

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Money latest: The jobs offering huge 'signing on' bonuses - including £20,000 in NHS and £10,000 at Boots

Healthcare professionals are being offered tens of thousands of pounds to take jobs from the likes of the NHS, Specsavers and Boots, new data shows. Read this and more in the Money blog, your place for consumer and economic news, and leave a comment on the stories we're covering below.

Thursday 22 February 2024 09:48, UK

  • The jobs offering huge 'signing on' bonuses - including £20,000 in NHS and £10,000 at Boots
  • 61 UK firms trialled four-day week - 54 have kept it going
  • Potato prices soar as much as 22%
  • Stealth tax behind jump in income tax receipts
  • Savings Guide : Should you lock your money away in a fixed-rate bond?
  • Cheap Eats : Michelin Guide chef picks favourites in South Yorkshire
  • Basically... What is VAT?

Ask a question or make a comment

Healthcare professionals are being offered tens of thousands of pounds to take jobs from the likes of the NHS, Specsavers and Boots, new data shows.

About 3,000 healthcare jobs offer the perk and the average bonus pay is £3,832, research from job search engine Adzuna found. 

The study looked at nearly 900,000 British jobs advertised on the site in January 2024, some 6,920 of which offered signing bonuses and 32,781 offered referral bonuses. 

The largest bonus spotted was £40,000 for the role of a medical director and psychiatrist for mental health service CAMHS at the Ivetsey Bank Hospital, run by Active Care Group.

Others on offer in healthcare include £20,000 for an oncologist or a histopathologist in the NHS, while Boots and Specsavers offered £10,000 welcome bonuses for optometrists. 

The bonuses are often offered to encourage applicants in roles that have been difficult to fill, or where there is a workforce shortage. 

Large bonuses are also available for those in the engineering and teaching sectors.

Some 1,351 engineering jobs included a sign-on bonus on their job adverts. 

Meanwhile, 465 job adverts for school staff advertised welcome bonuses - with the bonus pay averaging £1,867. 

Employers have also looked to plug staffing gaps using referral bonuses, which offer cash to employees who successfully recommend candidates for an open position. 

The top three sectors for referral bonuses advertised were teaching, social work, and healthcare and nursing. 

But bonuses were also available at companies including Tesco, Royal Mail, Megabus, Stagecoach and Mars Wrigley. 

But Andrew Hunter, co-founder of job search engine Adzuna, warned: "Jobseekers who want this financial sweetener, make sure to check the fine print before taking the plunge as there might be hidden clauses like minimum time commitment or performance goals."

East Suffolk and North Essex NHS Foundation Trust, which advertised some of the jobs, said: "We have offered a very small number of recruitment incentives in a limited number of very hard to fill specialist areas where there is a national shortage of colleagues. 

"The relocation payment element is only paid if the successful applicant moves to the area."

An NHS England spokesperson added: "While the majority of these are private company roles, all NHS jobs are advertised in line with government approved pay framework."

Boots declined to comment, while Specsavers did not respond.

By James Sillars , business reporter

A muted start on the FTSE 100 this morning - up by just under 0.2% at 7,673.

Some big strides for a few of its constituent companies.

Insurer Beazley's stock was more than 8% up after it revealed that additional investor returns were on the way.

Rolls-Royce, the engineering-to-defence specialist (not to be confused with the luxury car maker!), gained more than 7%.

It was in demand after revealing that profits more than doubled last year.

That was aided by the aviation sector's recovery from the COVID pandemic as its engines secured more flying time.

Defence spending and orders were also, naturally, up given the surge in global conflicts.

Among the losers was Lloyds.

The banking giant achieved record profits for 2023 but warned of strain in the current year given that the Bank of England was likely to cut interest rates at some point.

It predicted a lower net interest margin for 2024 and saw its stock fall by almost 2%.

Oil prices are remaining elevated given the tensions in the Middle East.

A barrel of Brent is up by almost a dollar on yesterday's levels at $83.

Each Thursday we look at a different savings option, explain the pros and cons and reveal the best deals on the market (see table below for that).  This week we're talking about fixed-rate bonds, and Savings Champion founder Anna Bowes has these thoughts...

As the name suggests, fixed-rate bonds pay a fixed rate of interest for a fixed term and this interest is taxable at your normal rate - if you exceed your Personal Savings Allowances.

Over the last couple of years, fixed-rate bond rates have increased substantially and many of the top rates are now paying more than inflation, although this may not be the case for those who pay tax on their savings.

That said, the competition has slowed recently as it appears inflation is more under control and as a result the Bank of England base rate is expected to start to fall. 

What is interesting and a little unusual is that the longer-term bond rates are lower than the short-term rates. Normally you would expect to be rewarded for tying your money up for longer, but that's not the case at the moment. 

This is a clear indication that the base rate is expected to fall over the next few months and years. 

So, locking into a longer-term bond, even at lower rates, may turn out to be a wise move, especially if the interest you are earning is beating inflation for the duration of the bond.

Click here to look at the best fixed rate bonds on Savings Champion

Love a fish and chips dinner? You may have noticed the price of potatoes has increased over the past month.

Some lines of potatoes are up by as much as 22% over the month due to weather issues affecting supply, according to analysis of Assosia data by The Grocer . 

Maris piper potatoes rose in price significantly between the week beginning 8 January and 12 February, with 2kg bags increasing by more than 10% in Lidl, Waitrose, Aldi, Tesco and Sainsbury's. 

In Sainsbury's, the biggest hike was 22.2% - from £1.35 per bag in the second week of January to £1.65 per bag last week. 

Tesco also had rises of more than 20%, saying there had been "challenging growing conditions" prompted by wet weather and that it was working to support farmers, growers and suppliers. 

This follows an annual average price hike of 11.5% for potatoes last year. 

NFU potato and policy chair Tim Rooke said earlier this week there could be a shortage by the end of the season. 

Poor weather had affected the quality of crops, he said, with many not "good enough to go into a bag to be put in Tesco".

Most UK companies that took part in the world's biggest four-day working week trial have kept the policy in place, according to a new report.

A total of 61 organisations took part in the 2022 pilot which saw employees work a shorter week with no loss of pay.

Of the companies involved, at least 54 confirmed they were still operating the policy one year on from the trial's initial results , and 31 have made the four-day week permanent.

The report from the Autonomy research group said all managers and CEOs consulted in a follow-up study said the four-day week had a "positive" or "very positive" impact on their company. 

The majority thought staff wellbeing had improved, while half said shorter weeks had a positive effect on reducing turnover.

Meanwhile, a separate follow-up survey with staff from 47 of the original pilot companies showed improvements in physical and mental health, work-life balance and general life satisfaction, Autonomy reported.

A four-day working week has generally been viewed positively, though some have raised concern over the pressure it could put on employees to cram their usual workload into a shorter space of time.

After Body Shop announced it was closing half of its stores in the UK, more than 2,000 jobs are at risk - but new figures show this is just the tip of the iceberg right now on the UK high street.

Data crunched by the financial website  Moneyzine  shows retail closures in January 2024 were 216% above the average of 2023, with 89 retail stores closing down every day last month.

Independent stores made up 75% of the total retail closures in January 2024.

Figures also show 9,950 people in retail lost their job every month in 2023 - that's 327 people on average every day.

Also last year, 8,745 retail stores closed every month on average.

Luke Eales, CEO Moneyzine, said data spanning from 2018 to January 2024 "painted a picture of a sector under siege". 

"Over these years, we've witnessed fluctuations in total job losses and retail store closures, but January 2024 marked a significant escalation in this trend, with retail store closures soaring to 216% above the 2023 monthly average," he said.

Aldi has revealed a big step up in its recruitment plans for 2024 through the creation of 5,500 new jobs .

The German-owned discounter had initially announced the creation of 1,500 jobs but said on Wednesday that the figure was being expanded to cover roles across the business.

Aldi, which is now Britain's fourth-largest supermarket chain after overtaking Morrisons in market share terms last year, said it is seeking store assistants, managers and cleaners at new stores opening this year.

Read the full story here ...

Average household disposable income has risen to the highest level since March 2022 , according to new figures from Asda's income tracker.

A typical UK household had £230 of disposable cash per week in January - a 6.1% rise year-on-year.

Weaker food price inflation and national insurance rate cuts contributed to the improvement, Asda said.

However it noted that while middle income households had the most "robust growth", it was a different picture for the lowest earning families who saw a decrease in their spare cash.

Britons spent more in discount stores last month as higher living costs continued to hit people's pockets.

Nationwide's latest spending report reveals households spent 41% more at budget outlets in January than in the same month last year.

Low-cost supermarkets Lidl and Aldi saw annual spending increases of 10% and 3% respectively, Nationwide said.

But despite Britons turning more to discount stores, its figures also show an increase in "discretionary" spending on holidays, health and beauty, gardening and subscriptions and digital goods.

The UK winners of a £61m EuroMillions jackpot have been revealed as Richard and Debbie Nuttall - who at first thought they had only won £2.60.

The lucky couple, both 54, from Colne,  Lancashire , won a £61,708,231 share of the £123m jackpot prize from the draw on 30 January - the other winning ticket having been purchased in Spain.

Speaking to the media today at Mitton Hall Hotel in Clitheroe, Lancashire, Mr Nuttall said: "We are dazed, it's surreal, it's a huge amount of money. You dream of winning the lottery but you never think it's going to be you, but it is."

He revealed he was checking his emails while on holiday in Fuerteventura, in the Canary Islands, earlier this year when he found a message from the lottery saying he had a £2.60 win in his account and told his wife.

She responded: "Woo hoo, we can get a bacon butty with that."

He then went out for the day and came back to the room. Then he checked his emails and found a message from the lottery saying he needed to check his account again.

Two new suppliers will be allowed to restart involuntary installations of prepayment meters, Ofgem has announced.

E.ON and Tru Energy have met strict criteria imposed last year amid concerns vulnerable people were being exploited.

EDF, Octopus and Scottish Power were the first suppliers allowed to restart in January.

It remains the case that suppliers cannot force prepayment meters on people aged over 75 with no support in their house or homes with children aged under two.

An Ofgem spokesperson said: "We've made clear that suppliers must exhaust all other options before considering forced installation of a prepayment meter, and consumers can help themselves by reaching out to their supplier as soon as possible if they think they won't be able to pay their bill, so payment options can be discussed. 

"Our rules on when, and how, a prepayment meter can be installed are clear and we won't hesitate to take action if suppliers act irresponsibly."

You can find out your rights on Ofgem's website  here .

As we reported earlier, UK government finances saw a record surplus in January thanks to a big rise in self-assessed income tax receipts and lower interest payments on the national debt.

The surplus was £16.7bn -the highest since records began in 1993, but still lower than expected.

These are the last set of public finance figures before the chancellor's budget in March - so what does it mean for the economy and people's pockets?

Why was income tax up?

Simon French, chief economist at UK investment bank Panmure Gordon, told business presenter Ian King that income tax receipts were up 11%.

This is largely due to a huge stealth tax imposed by the government in freezing income tax thresholds (instead of raising them in line with inflation) since 2021, dragging many more Britons into paying tax (this is known as "fiscal drag") and raising the amount the rest us pay significantly. The freeze will last for six years.

Jobs growth has also helped increase income tax receipts.

During the first 10 months of the financial year, the government borrowed £96.6bn. That was down £3.1bn on the same period last year and was below forecasts.

Stamp duty receipts down

"Stamp duty down 21% tells you about the very becalmed nature of the UK housing market," says Mr French.

This chart illustrates which receipts are up, and which are down...

But the surplus is good for the chancellor ahead of his 6 March budget, right?

Mr French points out that the increase in tax receipts is being outstripped by promised rises in benefits and pensions in April.

"In pounds, shillings and pence, benefit spending went up by even more than tax receipts, which is not great news for the chancellor," he said.

"The overall deficit is still... it's going to be £110bn for the year. That's still right on a knife edge of the fiscal rules.

"The idea that, in the round, this is now a very favourable public sector finance backdrop is just not true."

But the fact the government's energy support scheme has ended means there could be some leeway for tax cuts in the budget.

"You've got the potential to do that [but] I think the real challenge for the prime minister and the chancellor... they've talked very much about long-term decision making," said Mr French, adding that investing in the economy "might be the better strategic decision".

(Graphics: iStock)

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IMAGES

  1. What is a Loan Estimate? How to Read and What to Look For

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  2. What is a Loan Estimate? How to Read and What to Look For

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  3. Loan Estimate: What it is, How it Works, How to Read it

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  4. Land Transfer Taxes 101

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  5. Real Estate Transfer Tax Calculator

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  6. Loan Estimate: What it is, How it Works, How to Read it

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COMMENTS

  1. Transfer Tax Calculator 2023

    To estimate how much you owe in transfer tax, you simply need to multiply your transfer tax rate by your combined transfer tax. Some tax rates may differ based on your location and the home price. You should estimate transfer tax with your real estate agent to ensure the right result.

  2. Loan estimate explainer

    3 Actions to take Check the spelling of your name Check loan term, purpose, product, and loan type Check that the loan amount is what you are expecting Understand your monthly principal & interest Are there additional charges are included in your payment? Does your Estimated Total Monthly Payment match your expectations?

  3. What is a Transfer Tax?: When The Tax Man Crashes Your Home Sale

    Updated Jan 10, 2024 When you buy or sell a house, you must pay a transfer tax as a percentage of the sale amount. Depending on your address, it's possible to encounter transfer taxes at the city, county and state level. You may also run into federal transfer taxes on property obtained as a gift or inheritance.

  4. Can my final mortgage costs increase from what was on my Loan Estimate

    Check at the top of page 1 of your Loan Estimate to see whether your rate is locked, and until when. Learn more about how rate locks work. ... Transfer taxes; Costs that can increase by up to 10 percent. If there is a "change in circumstances," these costs can change by any amount. If there is no change in circumstances, then the total of ...

  5. PDF Guide to Completing the Loan Estimate

    Loan Estimate to help you make adjustments to avoid delay in loan submission. Guide to Completing the Loan Estimate ... Recording Fees and Other Taxes $152 Transfer Taxes F. Prepaids Homeowner's Insurance Premium ( 12 months) $1,000 Mortgage Insurance Premium ( months) Prepaid Interest ( $23.44 per day for 15 days @ 4.00%) $352 ...

  6. What Are Real Estate Transfer Taxes?

    Real property transfer tax (RPTT) is imposed on sales, grants, assignments, transfers or surrenders of real property. RPTT can occur on state and local levels, increasing expenses further. Here's how it works. financial advisor can help optimize your financial plan for taxes on a real estate transfer. What Are Real Estate Transfer Taxes?

  7. What Are Real Estate Transfer Taxes?

    A real estate transfer tax, sometimes called a deed transfer tax, is a one-time tax or fee imposed by a state or local jurisdiction upon the transfer of real property. Usually, this is...

  8. What is a Loan Estimate? How to Read and What to Look For

    Technically, a loan estimate is only binding on the date it's issued. The lender has to give you the loan, with exactly the terms listed in the loan estimate, if on that day you take steps to accept the loan and lock your rate in. Like stock prices, interest rates change daily — so if you don't lock in your mortgage rate, there's no ...

  9. A Guide To Loan Estimates

    The Loan Estimate also covers taxes and other government fees, any prepaid items, the initial escrow payment at closing and other costs. These are all added together at the bottom of the "Other Costs" section. Taxes And Other Government Fees. Taxes and other government fees can include recording fees, other taxes and transfer taxes ...

  10. Loan Estimate Explainer for First-Time Buyers (with Examples)

    Published: February 3, 2024 Loan Estimate Explainer for First-Time Buyers (with Examples) Once you get pre-approved for a mortgage, comparing rates is important. However, what's even more important is how you compare mortgage rates. You can do that with a loan estimate.

  11. PDF Guide to Completing the Loan Estimate (LE)

    Guide to Completing the Loan Estimate (LE) NOTE: This Guide is provided to help brokers complete the Loan Estimate form for loans that will be submitted to T.J. Financial, Inc., therefore may only ... Transfer Taxes are 0% Tolerance. Rev 4/24/2023 Page 6 F. PREPAIDS - Round to nearest whole dollar. Unlimited tolerance. Items to be paid by the ...

  12. Comment for 1026.37

    1. Applicable date. Section 1026.37 (a) (4) requires disclosure of the date the creditor mails or delivers the Loan Estimate to the consumer. The creditor's method of delivery does not affect the date issued.

  13. Understanding the Loan Estimate (LE) and Closing Disclosure (CD): What

    Group E: Taxes and Other Government Fees (transfer taxes, recording fees, all but property taxes). ... Loan Estimate: When refinancing, the Loan Estimate explicitly specifies the purpose as "refinancing your current mortgage." It dives into details of your existing loan, including the current interest rate, remaining balance, and the amount ...

  14. Guide To The TRID Rule & No Tolerance Fees In Real Estate

    One final type of fee subject to zero tolerance is transfer taxes. In general, transfer taxes are state and local government fees on mortgages that are based on the loan amount or sales price.

  15. Transfer Taxes

    Only transfer taxes paid by the consumer are disclosed on the Loan Estimate… [Commentary to §1026.37(g)(1) #4] Transfer taxes paid by the seller in a purchase transaction are not disclosed on the Loan Estimate… but are disclosed on the Closing Disclosure… [Commentary to §1026.37(g)(1) #5]

  16. Transfer of Deed Tax on LE Disclosure-Cure TRID?

    If it's known at the time the loan estimate is issued that the seller will pay that cost (based on the sales agreement for the property or even just a statement from the borrower that the seller has agreed to pay it), you can omit it from the loan estimate.

  17. What Are Transfer Taxes?

    Transfer taxes are calculated based on the sale price of your home, and can range from 0.01% to over 4%. Exactly what your tax rate will be will depend on where you live: state, county, and city transfer taxes might all apply depending on the tax laws in your area.

  18. Real Estate Transfer Tax Calculator

    To calculate the buyer's Chicago transfer tax, multiply the sales price by 0.75%. If you buy a home for $500,000 $500,000 sales price x 0.75% buyer's tax = $3,750.00 amount the buyer pays To calculate the seller's Chicago transfer tax, multiply the property's sales price by 0.3%. If you sell a home for $500,000 $500,000.00 sales price

  19. How To Compare Mortgage Loan Estimates

    E: Taxes and other government fees - This part of the estimate includes fees for recording the mortgage with the city or county as well as, if applicable, property transfer taxes.

  20. What Is A Transfer Tax?

    Answer: A transfer tax is a real estate tax usually paid at closing to facilitate the transfer of the property deed from the seller to the buyer. Depending on where you live, you may have to pay transfer taxes at the city, county, and state level. In special circumstances—such as the inheritance of a property—you may also encounter transfer ...

  21. Transfer Tax

    The Original / Initial Loan Estimate was disclosed showing 2% transfer tax:1% paid by the Seller, and 1% paid by buyer. We were just told, by the attorney, that since this is an estate transfer of ownership, the transfer tax is exempted and asked us to disclose. Since this is new informati...

  22. A NY Homeowner's Guide to CEMA Loans

    We keep the mortgage taxes on your Loan Estimate to ensure transparency on potential incurred costs until a final loan product is confirmed. As a result, your Loan Estimate will show the full Mortgage Recording Tax (the amount you'd have to pay if you weren't doing a CEMA) in Section E, p. 2 of your Loan Estimate under "transfer taxes."

  23. Florida Real Estate Transfer Taxes: An In-Depth Guide

    Florida transfer taxes are the same in every county with the exception of Miami-Dade. Outside of Miami-Dade County. Outside of Miami-Dade County, the transfer tax rate is 70 cents per $100 of the deed's consideration. In other words, you can calculate the transfer tax in the following way: (Total Price/$100) x .70 = Doc Stamps Cost. So, let's ...

  24. The Affordable Homes Act

    To estimate potential revenue generation, EOHLC relied on transaction data from the Warren Group, which was processed and provided in summary format by PFM, a consulting group conducting a state-funded study of excise and transfer fees in Massachusetts. ... Unlike the transfer tax proposed in the AHA, the 1% mansion tax is imposed on the full ...

  25. Money latest: Hidden tax on British workers leads to huge rise in

    Santander has announced it will increase all residential and buy to let fixed rate mortgages for new customers from tomorrow. Rates will increase by as much as 0.34%. It is also raising selected ...