A borrower is seeking an FHA-insured loan. He will put the minimum 3.5% down payment and pay the upfront mortgage insurance fee

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3 years ago

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A borrower is seeking an FHA-insured loan. He will put the minimum 3.5% down payment and pay the upfront mortgage insurance fee

of 1.75%. He will pay the annual mortgage insurance fee of .85% for the life of the loan. His interest rate is 5%, the APOR (as of the date the loan interest rate is locked) is 4.672%, and his APR for this loan is 6.474%. Is this a high-cost mortgage loan, higher-priced mortgage loan, or both

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1 answer:

ziro4ka [17] · Answer 1 · 2022-09-24T18:05:05+03:00

The APR is greater than the APOR threshold; hence, it is an example of higher priced loan.

APOR means authorized persons outside of residence and are used by government since the first lockdown in March 2020.

APOR threshold = Current APOR + 1.5%

APOR threshold = 4.672% + 1.5%

APOR threshold = 6.172%

The given APR in question is 6.474%.

In conclusion, the APR is greater than the APOR threshold; hence, it is an example of higher priced loan.