TIP

The Total Interest Percentage (TIP) is a new disclosure item created by the Dodd-Frank Act. The TIP indicates how much interest will be paid over the life of the mortgage loan, compared to the amount borrowed. TIP is calculated by adding up all of the scheduled interest payments, then dividing the total by the loan amount to get a percentage. The calculation assumes that all payments will be made as scheduled. The calculation also assumes the loan for the entire term. For example, a $100,000 loan has a TIP of 50% meaning that a total of $50,000 will be paid in interest over the life of the loan, in addition to repaying the $100,000 borrowed. If TIP is 100%, then $100,000 will be paid in interest (100% of the $100,000 loan amount) over the life of the loan. TIP for a loan can be found on Page 3 of the Loan Estimate or Page 5 of the Closing Disclosure. It is most useful as a comparison point between different Loan Estimates.