Explain whether this loan would be considered a Qualified Mortgage based on points and fees.
Understand the Problem
The question is asking whether a specific loan qualifies as a Qualified Mortgage based on the points and fees charged. To determine this, we need to analyze the financing details provided and assess them against the criteria for Qualified Mortgages.
Answer
The loan can't be a Qualified Mortgage if points and fees exceed 3% of the loan amount.
The loan would not be considered a Qualified Mortgage if the points and fees exceed 3% of the loan amount. For loan amounts less than $100k, higher percentage thresholds are allowed.
Answer for screen readers
The loan would not be considered a Qualified Mortgage if the points and fees exceed 3% of the loan amount. For loan amounts less than $100k, higher percentage thresholds are allowed.
More Information
A Qualified Mortgage aims to prevent lenders from offering loans unlikely to be repayable by borrowers. The 3% cap on points and fees is designed to keep borrowing costs manageable.
Tips
A common mistake is overlooking the adjusted thresholds for smaller loans under $100k, where a higher percentage of points and fees might be allowed.
Sources
- What is a Qualified Mortgage? - consumerfinance.gov
- Basic guide for lenders What is a Qualified Mortgage? - files.consumerfinance.gov
