Example 6 –Fixed Interest Rate with Balloon Payment
THESE ARE YOUR LOAN DETAILS
The following is a summary of many important details involving the mortgage loan for
123 Main Street, Hometown, USA 00000. Let’s compare these important details with the
Good Faith Estimate (GFE), loan documents, and other disclosures.
Fixed Interest Rate
Your loan has a fixed interest rate of 8.0%.
A fixed interest rate means that your interest rate will not rise over the life of the loan.
Your loan payment for principal and interest ($220.13) and mortgage insurance ($0 ) is
$220.13 and cannot rise.
You do not have an escrow account. Any and all items such as property taxes and
homeowners insurance must be paid directly by you.
Your total payment is $220.13 for principal, interest, and any mortgage insurance.
Your loan payment is due on the 1st of every month and is considered late after the 15th
of every month. If your lender receives your mortgage payment after the 15th, your
lender will charge a late fee of 5% of the overdue payment of principal and interest.
Your loan balance cannot rise.
You do not have a pre-payment penalty.
Your loan has a balloon payment. At the end of the loan term, any balance remaining will
have to be paid. In the case of a balloon loan, often very little, if any, of the loan balance
is paid down, therefore, the last payment, the balloon payment can be most of the initial
loan balance. Most consumers with a balloon note refinance their loan before the final
balloon payment becomes due.
Your balloon payment will become due on April 1, 2022 in the amount of $23,254.44.
Next we will review all of the HUD-1/1A charges and credits associated with your loan
and compare them to the GFE you received when you applied for this loan.