[mdunker]

I am trying to figure out what the product of our construction loan should be. Our construction loans are set up as follows 30 Year 8 month construction to permanent variable rate loan. 8 months of interest only, the permanent financing is a 6/1 arm. the initial interest rate is the same rate for the 8 months of construction as it is for the permanent financing 6/1. I have our main LOS who uses a third party doc provider disclose this as 8 mo. Interest only, 6.67/1 Adjustable rate. However when we go directly to the doc provider and pull a doc package that way our CD will come out with 8 mo. Interest Only, 6/1 Adjustable rate. Which way is correct? What can I provide each provider to make this correct?

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[jholzknecht]

Matt – Your question hits smack in the middle of a dilemma. The Comment D7.ii.B. clearly states that the term of the Interest Only period includes the term of the interest only payments during the construction phase and any interest only payments during the beginning of the permanent phase period. The commentary for Appendix D does not address the term of the introductory period. Presuming consistency can get you in trouble, but if the regulation is consistent from one section to another then the correct term of the introductory period would by 6.67 years.

Are you using two different vendors or are you getting different results from the same vendor depending on whether you obtain docs directly or through your LOS? I In either event I suspect that the different results you are obtaining may be the result of how you enter the data. Check with your vendor or vendors.

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