P*gv 10 Portland Observer Thursday. April 27. 1978
Truth in lending
All of us use credit tn one form or
another:
• Some of us charge our purchases at
department stores.
• Almost everyone signs a mortgage
when buying a house and sometimes
when arranging for a major home im
provement.
• Occasionally to borrow money from a
bank, finance company or other lenders
for vacation use. or perhaps, to meet
unexpected medical expenses.
In most cases, you have to pay a charge
for the use of credit. The purpose of the
Truth in Lending Law is to let consumers
know exactly what that charge is. and to
Color
saves
energy
Our C olon ial fath ers
were knowledgeable in
many areas other than
how to throw tea into
Boston harbor or draw
up the Declaration o f In­
d ep en d en ce. For in ­
sta n c e. they certain ly
were aware of what they
were doing when they ap­
plied dark colors to their
homes, particular!v in the
northern colonies.
“Colonial colors" were
mostly of deep tones and
they tended to absorb far
more heat than lighter
tones. And in homes
largely heated by fire­
places. heat co n serva­
tion was paramount.
One of the first colors
to appear in the colonies
was blue. A green was
m ade o f u nscorched
pulverized coffee and egg
w hite. N ext appeared
deep golds, browns, brick
reds, black and bronzes.
The colonists had little
risk o f p aint p eelin g,
but m any m odern
homeowners with tightly
sealed homes will en­
co u n ter th is p eelin g
problem, a condition in
which the paint becomes
detached and raises up to
form blisters or bubbles.
T h is gen erally re su lts
because a “ house has to
breathe.”
It is said a family o f
four will generate six
g a llo n s
o f m oistu re
within the home daily
from rou tin e b a th s,
showers, cooking, wash­
ers. dryers and other
appliances. The water
must escape through the
interior walls, through
exterior siding, and then
through th e ex terio r
paint.
M ost
p a in t,
p a r­
ticularly flat paint, will
permit moisture to pass
through. A heavy build­
up. how ever, w ill act
as a barrier. Moisture
that is trapped in the
siding under the paint
film and then heated by
the sun. turns to vapor
which forces paint blis
tering.
If
b listerin g
is
m in im a l, scrap e
all
loosely adhering paint
down to the surface, spot
prime and re-coat. When
a severe condition is
evident, caused by trap­
ped m oistu re and a
build-up of paint.
1. BEST AND IM
MEDIATE CORREC­
TION - Remove all paint,
re-prime and finish. For
permanent correction, in­
sert small metal wedges
or shims under each
board where it is nailed
to a stud. This will pry
boards away from siding
about 1/16 o f an inch
and allo w s su ffic ien t
back ventilation to relieve
even severe moisture ac­
cumulation.
2.
LO N G T E R M
C O R R E C T IO N
■ If
removal of all paint is im ­
p ra ctica l,
shim
the
boards as described in
“ 1” to break the paint
seal between overlapping
boards and allow ventila­
tion. Scrap and remove
all loose paint down to
bare wood. Spot prime
scraped area and then
apply a finish coat. While
this does not immediately
correct all areas, any fur
ther p eelin g w ill be
lim ited to areas not
sc ra p ed .
W ith
each
repainting, the condition
will improve.
let them make comparisons more readily
of the charges from different credit
sources.
The law therefore requires
creditors to state such charges in a
uniform way.
Two To Remember
The law makes it easier for you to
know two of the most important things
about the cost of credit. One is the finance
charge - the amount of money we pay to
obtain credit. The other is the annual
percentage rate, which provides a way of
comparing credit costs regardless of the
dollar amount of those costs or the length
of time over which we make payments.
Both the finance charge and the annual
the Truth in Lending Law they must not
total all such charges, including the
interest and call the sum the finance
charge. And then they must list the
annual percentage rate of the total
charge for credit.
The Truth in Lending Law does not fix
interest rates or other credit charges.
Your State may have a law setting a limit
on interest rates, which would still apply.
percentage rat,’ must be displayed promi
nently on the forms and statements used
by a creditor to make the required
disclosures
Let's suppose you borrow $100 for one
year and pay $6 interest for that money.
If you have use of the entire amount for
one year you are paying an annual
percentage rate of 6 percent. But if you
repay the $106 in twelve equal monthly
installments, you do not have use of the
entire amount for the full year. In fact,
over the entire year you have the use on
the average of only about half the full
$100. So the $6 charge for credit in this
case becomes an annual percentage rate
of eleven percent.
Some creditors levy a service charge or
a carrying charge or some other charge
instead of interest, or perhaps they may
add these charges to the interest. Under
Advertising
The law also regulates the advertising
of credit terms. It says that if a business
is going to mention one feature of credit
in its advertising, such as the amount of
downpayment, it must mention all other
important terms, such as the number,
amount, and period of payments that
follow. If an advertisement states “Only
$2 down," it must also state, for example,
that you will have to pay $10 a
week for the next two years. Here again,
the intent is to provide you with full
information so that you can make inform
ed decisions.
Cancellation.
Another important provision of the law
is designed for your protection in case
your home is used as security in a credit
transaction. This frequently occurs when
a major repair or remodeling job is done
on your home or when you take out a
“second mortgage". When you enter into
a credit transaction in which your home is
used as security, the law gives you three
business days to think about it and to
cancel the transaction during that period
if you wish. The creditor must give you
written notice of your right to cancel, and
if you decide to cancel the transaction,
you have to notify him in writing.
When you have this right of cancella
tion, a contractor cannot start work until
the three days are up. You may give up
your right to cancel and get the work-
started without the three-day wait, if you
notify the contractor in writing that you
face a real financial emergency am need
the credit immediately to finance repairs
necessary to avoid danger to you. your
family, or your property.
The right of cancellation does not apply
to a first mortgage to finance the
purchase of your home.
Te Find tb it More
If you have any questions about Truth
in Lending, please contact one of the
FDIC's fourteen Regional Offices or the
Office of Bank Customer Affairs/
Equitable Savings introduces the Good Start Mortgage
to make things easier for the first-time home buyer.
MORTGAGE PAYMENT BE
AS HIGH THE FIRST MONTH
AS IT WILL BE THE LAST?
With a regular mortgage, your payments
never change. But your income rises. So the
first few years can be rough. And the later
years easier. With Good Start, you pay less
for the first 6 years, when your income is
lowest. Later, you pay back the amount that
was reduced. But by then, you can
better afford it.
When you can
least afford it...
It's unfortunate but true, that chances are
you w ill have to watch your budget pretty
closely the early years of your first home
mortgage, in order to make your monthly
payments, and all the other expenses that
come with home ownership. At a time when
your income is likely to be lower than it
will ever be again during your lifetim e . . .
at least until retirement.
Equitable Savings has something a little
out of the ordinary that can help.
How do you qualify?
With the Good Start
Mortgage, the first six
years can be easier.
■ ' x f
You qualify just as you would with any other
home loan. But there are a few extra
questions, too.
Take a look at these five qualifiers:
1. Is this the first home you have ever bought?
2. Is the loan for a completed house?
3. Do you plan to live in the house?
4. Do you have the 10% downpayment?
5. Is the price of the home $55,000 or less?
If you answered "yes” to all five, come in
and talk to us. Chances are, we can help
you get off to a Good Start on a more liveable
mortgage now, when you need it most.
It’s something a little out of the ordinary,
only from Equitable Savings.
The Good Start Mortgage actually defers part
of your interest when you first start payments.
Two years later, you pay a little more.
After six years, your payment is up to what
it would have been with a regular mortgage,
with the deferred payments added over
the balance of your mortgage to make up
for the reductions.
So you're paying less when you can least
afford it. More when you can afford it more.
Here, for example, is how your monthly
principal and interest payments might work
out for a $35,000, 30-year mortgage
at a 9’/2% rate:
G et o ff to a Good S ta rt w ith a
m o rtg a g e you can live w ith .
Eauitable
Here's how it works graphically.
Normal Income Pattern ~~
Monthly
G ood S U rt
Paymant
Reculer
M ortgage
Paym ant
Month* y
A (l» » n |» a . with
G ood Start
Dollars
$302 55
Year 1 and 2
$244 30
$294 30
$50 00
Year 3 and 4
$261 30
$35 00
Year 5 and 6
$278 30
$294 30
$294 30
Year 7 thru 30
$302 55
$294 30
$ 8 00
$1600
$294 30
$278 30
♦""^R egular Mortgage Payment
ftm
Good Start Mortgage Payment
$261 30
People with something a little out ot the ordinary.
$244 30
S u b je ct to c h a n g * o r t e f f f i'n ib o r w ith o u t n o tic e
2
4
See The Yellow Pages For
6 .Years
For the example, the estimated Annual Percentage
Rate Is 8 75%, and the loan would be payable in
360 monthly payments
The Office Nearest Yoa
I