Regulation Z and Calculating HELOC Payments for Underwriting Purposes
Issue/Inquiry
The Bank’s Home Equity Line of Credit (“HELOC”) product offers a draw period for 10 years, with interest-only payments fixed at the current prime rate for the first six months, then adjusting to the floating prime rate. After the draw period, the line converts to a 15-year term, with interest floating at prime. For underwriting purposes, what is best practice for calculating the monthly payment?
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