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In determining our max 5 year rate for QM for a 3/1 arm with a margin of 2.39%, annual cap of 1%, initial rate of 2.94% based on the current 1 year t bill of .59. Would I base my next change on the fully indexed rate plus the 1%? Or do I base it off of my initial interest rate since it will never go to the rate of 3.98%. I can’t find it in the regulation on how to calculate the max 5 year rate. I see in the ATR that it states to use the fully indexed rate.
mdunker:
It looks like we missed your question when you posted it. If you still an answer we’re happy to help. I just need clarification on a few points. First, I want to confirm your margin is 2.39%? Second, am I correct in thinking your initial rate of 2.94% is an introductory rate and not your index plus your margin (fully indexed rate)? Finally, you mentioned the 1% annual rate cap, is there a rate floor?
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