When must redisclosure occur for rate changes?

Redisclosure is required when there are changes to the loan terms, particularly affecting the interest rate. In the context of fixed-rate mortgages, the threshold for redisclosure is established by regulations, which indicates that significant changes to the interest rate—specifically any increase of 1/8 percentage point—mandate redisclosure to the borrower. This allows borrowers to understand how their loan terms have been altered and ensures transparency in the lending process.

For adjustable-rate mortgages, different thresholds apply, but in this context, the importance lies in understanding that fixed-rate loans have a specific redisclosure requirement tied to interest rate changes. By ensuring that borrowers are informed with updated disclosures, lenders maintain compliance with the regulations designed to protect consumers, thereby promoting informed decision-making.

This standard practice is key to ensuring borrowers have all necessary information and can make knowledgeable choices about their financing options.