Rates Assumption
Representative rates are based upon below assumptions. Actual available rates and monthly payment amounts are subject to market fluctuations and will depend on several factors, including geography and loan characteristics. Representative rates assume a single unit house purchase, minimum credit score of 740 and loan-to-value ratio of 75, monthly payment is based on loan amount of 375,000 and down payment of 125,000.
Estimated monthly payment amounts displayed are based upon principal and interest only, and taxes and insurance are not included in this estimate; the actual payment obligation may be greater. Not all borrowers will qualify for these rates. Final loan approval is subject to criteria established by a lender, including satisfactory appraisal, title review, and underwriting determination, among other criteria. Rates subject to change without notice. Restrictions apply.
ARM Parameters:
SOFR ARMS: SOFR = Secured Overnight Financing Rate
10 Year (10yr/6m) Initial fixed rate period: 120 months, Periodic rate adjustment: every 6 months
Caps 5/1/5 (initial cap 5 /periodic cap 1 /lifetime cap 5)
What are origination fees?
An origination fee is what the lender charges the borrower for making the mortgage loan. The fee may include processing the application, underwriting and funding the loan as well as other administrative services. Origination fees generally do not increase unless under certain circumstances, such as if you decide to go with a different type of loan. For example, moving from a conventional to a VA loan. You can find origination fees on the Loan Estimate.
What is a discount point?
Discount points are optional fees paid at closing that lower your interest rate. Essentially, discount points let you make a tradeoff between your closing cost fees and your monthly payment. By paying discount points, you pay more in fees upfront but receive a lower interest rate, which lowers your monthly payment so you pay less over time. Any discount points purchased will be listed on the Loan Estimate.
How much is a mortgage point?
Each point equals 1% of the loan amount. For example, one point on a $100,000 loan would be 1% of the loan amount or $1,000. Two points would be 2% of the loan amount or $2,000.
What is the difference between interest rate and APR?
Interest rate is a percentage of the total loan balance paid to the lender on a monthly basis (i.e. the cost of borrowing money from the lender). The annual percentage rate, or APR, is the total borrowing cost as a percentage of the loan amount, which includes the interest rate plus any additional fees like lender fees, discount points and other costs associated with procuring the loan.
What is an adjustable-rate mortgage (ARM) loan?
An adjustable-rate mortgage (ARM) is a loan in which the interest rate may change periodically, usually based upon a pre-determined index. The ARM loan may include an initial fixed-rate period that is typically 5 to 10 years. The interest rate then may change (adjust) each year thereafter once the initial fixed period ends. For example, with a 5/1 ARM loan for a 30-year term, your interest rate would be fixed for the initial 5 years and could fluctuate up or down each subsequent year for the next 25 years.
What is a DSCR Loan?
Debt Coverage Ratio (DSCR)
The DSCR is the ratio of operating income available to debt servicing for PITIA.
The DSCR is calculated by taking 100% the gross rents divided by the PITIA of the subject property.
DSCR Example One – DSCR Ratio 1
Gross Rent from Subject Property = $2,000
PITIA = $1,500
$2,000 ÷ $1,500 = 1.33 DSCR
Loan qualifies for DSCR Ratio 1 product: 1.33 DSCR exceeds minimum 1.0 requirement
Example Two – DSCR No Ratio
Gross Rent from Subject Property = $2,000
PITIA = $3,000 $2,000 ÷ $3,000 = .67 DSCR
Loan qualifies for No Ratio product: DSCR of .67 is less than 1.0 requirement
Prepayment Penalty Options Associated with DSCR Loans
*No prepayment penalty
*Three-, two- or one-year prepayment penalty options:
Six months interest on excess of 20% of the original principal balance or 5% of unpaid principal balance depending on which lender