01-19-2007, 11:50 AM
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qualifying rate is the rate at which a borrower must satisfy the DTI requirements in order to qualify for the loan.
You'll see this commonly with option arm loans, but also with some interest only loans. the minimum payment for an option arm might be 1.25% However, the borrower has to meet DTI requirements at the fully indexed rate (qualifying rate) of 6.951%. Read the guidelines or ask your AE what the qualifying rate is. With some option arms they still qualify borrowers using the interest only rate which is just dumb in my opinion. For most of them it is the fully indexed rate. Hope that helps. Troy
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