Mortgage loan scams are too common. First time homebuyers and unwary buyers are typical prey of mortgage lenders. Because these buyers are less likely to shop around for a good mortgage deal, or know their rights as a borrower, the lender uses this as the opportunity to profit from their lack of knowledge. Fortunately, there are laws in place to protect homebuyers from shady mortgage practices.

Truth in Lending statements must be provided to each borrower by their mortgage lender. Even though the information included within the Truth in Lending statement can change, it provides a rough estimation of future costs. As a means of keeping the doors of communication open with borrowers, lenders must provide this statement within 3 days of a borrower submitting their loan application. Disclosures included in the Truth in Lending include:

Aside from providing borrowers with estimation of the above costs, the Truth in Lending statement also supplies information regarding the loan's late fees. If the mortgage lender allows a grace period, the statement may provide additional information on the number of days before a late fee is charged.

Because a large percentage of mortgage loans include a prepayment penalty, borrowers should carefully read their Truth in Lending statement to determine whether a prepayment penalty is in effect. If so, refinancing the loan can be costly. If choosing an adjustable mortgage loan, the Truth in Lending will generally provide information on the number of adjustment periods, payment schedule, and lifetime caps.