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#1165074 - 04/16/09 08:56 PM APRWIN Construction Loans again
KTMiteComply Offline
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I have read posts over the last year concerning Construction Loans and using APRWIN. As a matter of fact I really and truly thought that I had this issue down and things were going quite smoothly for some time now. However either I have totally forgotten something or we have something wrong here in our system due to an upgrade.

I know about keying in ODD days and I pretty much know where to key the figures in, but here is where I think I see the problem and need to double check myself.

In the field Annual Simple Interest Rate it was my understanding that we are to key into this field the Interest Rate from the Actual Note. However when I do this everytime I get "Finance Charge is Understated"...

However...if I key into this field the Construction Interest Rate from the Note ALLONGE, which is usually Prime + whatever...then it comes out perfect!!!

I know I'm crazy...but I know that my notes say we use the NOTE amount and it's always been fine in the past so either I WAS doing it wrong or AM doing it wrong now.... eek whistle

HELP crazy THANKS!
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#1165094 - 04/16/09 09:06 PM Re: APRWIN Construction Loans again KTMiteComply
rlcarey Offline
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Why are the rates different between the note and "note allonge" whatever that might be?
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#1165100 - 04/16/09 09:10 PM Re: APRWIN Construction Loans again rlcarey
KTMiteComply Offline
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only if I want to....
The Construction Allonge to the Note shows the construction terms, i.e dates and rate of the construction period. On the Conversion Date the Borrower will then refer to the Note without regard to the Allonge for their monthly payments, interest and so forth...
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#1165181 - 04/17/09 01:40 AM Re: APRWIN Construction Loans again KTMiteComply
rlcarey Offline
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Galveston, TX
So thne the interest rate during the construction period is based on the "allonge"? Why then would you use the note rate in APRWin?
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#1165263 - 04/17/09 01:26 PM Re: APRWIN Construction Loans again rlcarey
KTMiteComply Offline
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Because that is what the Final TIL is based upon.

Here are the particulars about this loan:

Loan Amount 192,000
Note Rate - 7.125%
Allonge Period from 07/22/08 - 04/01/2009 - Rate Prime +.50= 5.50%
The Loan Actually Converted on 3/01/09 and the Note Rate was 7.125%

Final TIL "estimated" 7.274%
Disclosed Finance Charge 281,017.38
Amount Financed 188,616.32

Schedule:

9 Varying begining August 1
359 @ 1293.54 May 1 2009
1 @ 1292.84 April 1 2039

The Prepaid Fees are 3383.68

Hey...I really appreciate so much you helping me!
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Trust in the Lord with ALL your heart...Prov 3:5-6

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#1165368 - 04/17/09 02:32 PM Re: APRWIN Construction Loans again KTMiteComply
dbrunow Offline
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It appears that both phases are reflected on the same TIL - are you computing it that way in APRWIN?

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#1165376 - 04/17/09 02:34 PM Re: APRWIN Construction Loans again dbrunow
KTMiteComply Offline
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only if I want to....
ummmmmm....I was thinking I was....

Can you give me some guidance on what you do to make sure I am doing so?

Thanks!!!
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#1165380 - 04/17/09 02:38 PM Re: APRWIN Construction Loans again KTMiteComply
dbrunow Offline
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On the first "Construction Loan" screen, I choose "Construction and Permanent (Part II)" from the "Financing Disclosure Options" box.

Based on what I have seen so far, I would put the allonge rate in the first box and then put the permanent information in a couple of screens later.

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#1165405 - 04/17/09 02:50 PM Re: APRWIN Construction Loans again dbrunow
rlcarey Offline
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Galveston, TX
You would but your note rate on the first screen (7.125) and you are going to have to adjust the estimated construction interest (third page) as it is accruing at a different rate.
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#1165443 - 04/17/09 03:11 PM Re: APRWIN Construction Loans again rlcarey
dbrunow Offline
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Why would you enter the note rate? Wouldn't you enter the rate that applies to the construction phase?

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#1165448 - 04/17/09 03:14 PM Re: APRWIN Construction Loans again dbrunow
KTMiteComply Offline
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only if I want to....
OK...I do select all the Const/Perm boxes like you've indicated. I do the actual days and key in the Allonge Days from the Note on the calendar....

but I'm really confused about keying in the Allonge Rate of Prime for the entire payment streams b/c aren't we actually basing prime ONLY for the construction period and the Final TIL Rate for a Const Perm is based upon the Entire Perm Phase? So I would think in the 1st Box you would key in the Actual Note Rate and the 2nd box you would key in the actual TIL rate?

At least it "used" to work out that way for me.... smirk wink
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#1165471 - 04/17/09 03:20 PM Re: APRWIN Construction Loans again KTMiteComply
dbrunow Offline
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According to the help from APRWIN (which I wish I could copy and paste, but can't), under "Annual Simple Interest Rate", you should enter the Simple Interest Rate that applies to the construction portion of the loan. It goes on to say that the rate applicable to the permanent phase will be reflected in the payment schedule.

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#1165510 - 04/17/09 03:35 PM Re: APRWIN Construction Loans again dbrunow
KTMiteComply Offline
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only if I want to....
I think it was the 1st part that stumped me....Maybe it was the fact that the previous Construction loans that I did were so "close" in the FINAL NOTE Rate and the CONSTRUCTION LOAN Rate that it didn't reflect an issue??? I obviously must have misunderstood the training... eek


Here is from APRWIN for anybody else that runs into this...thanks dbrunow:

Enter the simple interest rate that will be applied to advances of principal on a loan subject to Appendix D to Regulation Z. If this rate is variable, generally the rate at consummation is assumed to be in effect over the period during which multiple advances are made (e.g., during the life of the construction period).


If the rate applicable to the permanent phase of a construction loan is different from the rate on the construction phase (e.g., on a step-rate or a discounted variable rate loan), enter the simple interest rate that will be applied to the construction phase. The rate or rates applicable to the permanent phase will be reflected in the payment schedule.
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#1165590 - 04/17/09 04:36 PM Re: APRWIN Construction Loans again KTMiteComply
rlcarey Offline
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Galveston, TX
Sorry, I stand corrected. I should have went to the instructions.
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#1165598 - 04/17/09 04:43 PM Re: APRWIN Construction Loans again rlcarey
KTMiteComply Offline
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only if I want to....
Don't you worry about it one little bit my friend!!! I HAD WENT to the directions before I ever came here... crazy wink laugh

thanks for all ya'lls help!
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Trust in the Lord with ALL your heart...Prov 3:5-6

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#1165609 - 04/17/09 04:50 PM Re: APRWIN Construction Loans again KTMiteComply
dbrunow Offline
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Glad I could help - don't get to do that too often.

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#1166264 - 04/19/09 08:24 PM Re: APRWIN Construction Loans again dbrunow
Richard Insley Offline
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Toano, VA
This thread illustrates the problems with combined CST/PRM disclosures. Divide and conquer--separate disclosures are simpler & you're much less likely to make a mistake that would live in the perm file. If the perm disclosure is clean, the loan will be more marketable.
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