[kvet18]

When calculating the In 5 Years Calculation on page 3 of the LE, if the loan costs and prepaid interest are financed – do we add them into the In 5 Years amount or leave them out?

[rcooper]

Yes – they would be included in the Payment in 5 Years amount.

[Kristin]

So because it is financed, it is therefore included in the principal (payment), so we do not add them to the principal and interest? So in this example where prepaid interest and closing costs are financed into the loan amount, we would NOT add prepaid interest and total loan costs to the In 5 Year amount because they are already included? By chance do you have a citation or guidance (in a manual or somewhere else) that specifically discusses what to do if fees are paid in cash or just financed?

[rcooper]

Kristin – I agree with your conclusions.

I am basing my answers off of the regulations at 1026.31(l)(i) and its commentary:
1026.31(l):
(l) Comparisons. Under the master heading, “Additional Information About This Loan” required by paragraph (k) of this section, in a separate table under the heading “Comparisons” along with the statement “Use these measures to compare this loan with other loans”:

(1) In five years. Using the label “In 5 Years”:

(i) The total principal, interest, mortgage insurance, and loan costs scheduled to be paid through the end of the 60th month after the due date of the first periodic payment, expressed as a dollar amount, along with the statement “Total you will have paid in principal, interest, mortgage insurance, and loan costs”;

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