What is a finance charge?

A finance charge is the total cost of obtaining a mortgage loan, expressed as a dollar amount rather than a percentage. It encompasses all of the costs charged by the lender over the life of the loan, including interest payments, any prepaid interest paid at closing, origination fees, and other lender-imposed charges. The finance charge is disclosed to borrowers as part of the federal Truth in Lending Act requirements and helps illustrate the full long-term cost of borrowing.

While the finance charge may seem like an abstract number — sometimes hundreds of thousands of dollars over a 30-year mortgage — it is a useful figure for comparing loan products and understanding the real cost of homeownership. For buyers in the Western Catskills financing properties in Delaware, Ulster, Greene, or Otsego counties, even small differences in interest rate or fees can translate into significant differences in total finance charges over a long loan term. This is why shopping multiple lenders and comparing both APR and total finance charges is always worthwhile.