Reply To: Preferred Rate Loans


In order to meet the QM requirements, you would use the highest rate possible in the first five years after the first payment is due, so if the non-discounted rate is a possibility (meaning the discounted rate is conditional and can revert to the non-discounted rate) you would use the non-discounted rate.

Response by jholzknecht:
The ability to repay rules do not specifically address preferred rate loans. Robin’s reply provides a safe course of action for General Rule QMs. If you utilize one of the other ability-to-repay options the response may be different.

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