what is considered a high cost mortgage loan

Best answer


Above-average fees or interest

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  • What is a high-cost mortgage?

  • A loan is considered a high-cost mortgage if its APR as of the date the interest rate is set exceeds the Average Prime Offer Rate (an annual percentage rate that is derived from average interest rates, points, and other loan pricing terms) for a comparable transaction on that date by more than:

  • What is the point and fees threshold for a high-cost mortgage?

  • For loans over $20,000, the point and fees threshold is 5 percent of the loan amount. The threshold for loans under $20,000 is the lesser of 8 percent of the loan amount or $1,000. There is one additional test for a high-cost mortgage related to any prepayment penalty.

  • What are the features of a high cost home loan?

  • Features of High-Cost Loans. A high-cost home loan exceeds one of two thresholds set by the federal government: the interest rate threshold or the point and fees threshold. The interest threshold for a first mortgage is a rate of 6.5 percentage points above the APOR.

  • What is a high-risk mortgage?

  • Subscribe to news about Home Loans. A high risk mortgage is a mortgage loan that falls outside of the normal scope of risk that lenders are used to. When you are dealing with a high risk mortgage, everything else that has to do with the loan changes. Your lender will have different programs for you and different options within those programs.

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