Above-average fees or interest
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When is a mortgage considered high cost?
There is one additional test for a high-cost mortgage related to any prepayment penalty. If the penalty is applied more than 36 months after the loan is opened or if the penalty amount is more than 2 percent of the prepayment amount, then the mortgage is high-cost.
What is a high-cost loan?
High-cost loans can’t have certain features under federal law, such as some types of balloon payments in the terms of the mortgage. A high-cost loan can’t charge fees for loan modifications loan or for a loan payoff statement.
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.