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PA CONSTRUCTION MORTGAGE PROGRAM II --- PA Rate Cap with Float Down details.

Pennsylvania One Closing Construction Loan with optional Free Float Down

New:  It is the borrower's choice to deduct .125% from the rate by electing to opt of of the free float down

To provide Pennsylvania (only) borrowers with additional security in a volatile market, we are introducing the Rate Cap Program. The Rate Cap Program provides borrowers an end loan option with a maximum interest rate ceiling to protect the borrower in an up trending market while allowing them to lock in to a lower interest rate if market conditions remain below their cap.

This program is available for the following products:

  • 15 yr Conforming Fixed Rate Mortgage
  • 30 yr Conforming Fixed Rate Mortgage
  • 30 yr Conforming Bi-Weekly Mortgage
  • 30 yr Jumbo Bi-Weekly Mortgage
  • 5/1 ARM with Pre-Payment Penalty

PA Construction Loan Program Features:

The program uses one rate during the construction phase (7.99% on 10/31/07) interest only payments -- only on amount draw, and the end loan cap (fully amortizing loan with payments of principal and interest). Borrowers can select a cap ranging from 180, 240, 270, 360 or 390 days. The applicable capped interest rate also serves as the interim construction interest rate. The program uses a 12-month construction term that begins at loan closing and runs independent to the end loan cap term. (it is possible for the end loan cap to expire in advance of the construction term, construction rate is not affected for the full 12 month construction term).

660 min. credit score required.

Setting The Rate Cap:

  1. Choose from one of the 5 programs listed above.
  2. Refer only to the current 60 day rates with this lender (we can provide this), identify the rate and add on the appropriate percentage from the grid below:

    Cap Period Rate Add On (reduce by .125% to waive free float down):

    • 180 Days (6 Months) .5%
    • 240 Days (8 Months) .625%
    • 270 Days (9 Months) .75%
    • 360 Days (12 Months) 1.00%
    • 390 Days (13 Months) 1.125%

    The resulting base rate plus the appropriate add on determines both the cap rate and rate during construction.
     
  3. Within 10 days of completion borrowers may choose to select a 60 day interest rate (rate less than the capped interest rate), add .125%,  and re-lock with the Servicing Department.   At this float down time, you work directly with the lender who quotes you the 60 day rate.  (Many lenders do not give you a true opportunity to float down like this as they quote some unpublished rate at float down time that is the same as the initial rate, even though rates have dropped.)

Determining the Cap Period for Rate Cap Program:

  1. You must choose a lock period sufficient to accommodate any processing time plus the time to complete construction. Failure to select a sufficient cap term could result in the cap expiring before construction is completed. The rate cap term begins when the cap is set/locked. Rate caps may be extended beyond the original term in 30-day increments for a fee payable by the borrower at time of extension. Failure to extend a rate cap subjects the borrower to current market conditions.

Frequently Asked Questions

  1. When does the construction term begin? At the construction closing.
  2. How long is the construction term? Up to 12 months, but borrowers should modify to their permanent financing as soon after completion as possible.
  3. When does the Rate Cap Period begin? When the borrower requests it, anytime between application and closing.
 
Contact our EasyLoan Hotline at (610) 326-2099 or  (800) 441-3721 or online. 
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