What does the acronym PFC stand for in mortgage terms?

The acronym PFC in mortgage terms stands for "Prepaid Finance Charge." This is a key concept in mortgage lending as it refers to fees that are charged to the borrower before the loan is made and are considered part of the cost of obtaining the loan. Prepaid finance charges typically include costs such as points, which are upfront fees paid to lower the interest rate on the loan, as well as other costs like loan origination fees or certain third-party fees that are paid at closing.

Understanding what constitutes a prepaid finance charge is important for both borrowers and lenders, as it helps in calculating the effective cost of a loan. This term is also relevant in the context of the Truth in Lending Act (TILA), which aims to inform borrowers of their total upfront costs and the actual annual percentage rate (APR) of the loan, which includes these charges. This transparency helps borrowers compare different loans effectively and understand the overall financial commitment they are making.