TRID: Construction Loan APRs

Calculating the Annual Percentage Rate on a construction loan can be a little tricky as there are actually a couple of options to consider. Regulation Z states that creditors may use, at their option, the following methods to estimate and disclose the terms of multiple-advance construction loans…

  1. Assume that one-half of the commitment amount is outstanding at the contract interest rate for the entire construction period. [TILA Appendix D Part I and Part II (A)(1)]; Or
  2. Assume that the entire commitment amount is outstanding at the contract interest rate for the entire construction period. [TILA Appendix D Part I (B)(1) and Part II (A)(2)]

The APR will vary depending on the assumption you choose. While many institutions have loan systems to calculate the APR, it’s not a bad idea to double check it from time to time.

Jerod provides a few tools that could help you.

 
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Published
2024/07/19
Jerod Moyer

Jerod Moyer

Jerod is the leader of Banker’s Compliance Consulting’s training productions. He is a nationally recognized speaker. Whether it’s a conference, seminar, school, webinar or luncheon, it’s easy to stay engaged when he presents due to the amount of passion and energy he brings to each and every compliance topic. Jerod has spoken on behalf of the American Bankers’ Association, BankersOnline, many state banking associations, private compliance groups and financial institutions. He is a Certified Regulatory Compliance Manager (CRCM) and BankersOnline Guru. Jerod likes to spend his time (between reading regulations and producing compliance training!) relaxing at the lake with his wife and three children, following their activities or engaged in something sports-related!

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TRID: Construction Loan APRs
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