My APR is less than my note rate. What gives?

If the loan file is an ARM:

The margin plus the index may be lower than the note rate. If this is the case, the rate will actually drop at the first adjustment period, causing the APR to dip lower the note rate.

Adjusting the ARM parameters:

  1. Open the loan file whose APR is below the note rate.
  2. Go to the main menu, click Good Faith/Compliance on the left, click Loan Programs in the center section, then click Edit on the left.
  3. Click on the assist button to the right of the loan programs field on the left side of the screen.
  4. Adjust the index field and margin field, if necessary.
  5. Click close to save changes and exit the arm parameter screen.

If the loan file has seller paid closing costs:

You may have entered an amount for the seller paid closing costs that is higher than the total prepaid finance charges due from the borrower. That can cause your APR to drop below the note rate. Check the total at the bottom of the prepaid financed charges column on the itemization of amount financed Byte form. If the total from the borrower is shown in brackets, you are indicating that the borrower will be receiving money at closing.

Checking the itemization of amount financed:

  1. Open the loan file whose APR is below the note rate.
  2. Click Utilities in the menu bar at the top of the screen, then click print all from the dropdown list.
  3. Click on Itemization of Amount financed in the left column.
  4. Click preview.
  5. Examine the prepaid financed charges total at the bottom of the screen.

Adjusting seller paid closing costs:

  1. Open the loan file whose APR is below the note rate.
  2. Go to the main menu, click Good Faith/Compliance on the left, click Credits in the center section, then click Edit on the left.
  3. On the left side of the screen, click on the assist button to the right of line k. closing costs paid by seller.
  4. Compare the total seller contribution to the total borrower cost.