[NMLS SAFE] 26, Origination Math in Practice: LTV, DTI, Per-Diem and Points

Lesson 26 of the free Quibank NMLS SAFE course — and the origination block's final exam. Four calculations, straight from the question bank: loan to value, the two debt ratios, per diem interest, and points. Pause before each answer and work it yourself. First, loan to value.

A home's contract price is 320,000 dollars; it appraises at 330,000. The first mortgage is 256,000, with a simultaneous second lien of 16,000. Loan to value divides by the lesser of price or appraised value — 320,000, not three thirty. Two fifty-six over three twenty is 80%.

Combined loan to value adds every lien: two seventy-two over three twenty, 85%. Dividing by the appraised value is the trap. Second, the ratios. Gross income, 7,500 a month.

The housing payment: sixteen fifty principal and interest, two fifty taxes, 100 insurance, 100 association dues — 2,100 in total. Front end: 2,100 over 7,500, 28%. For the back end, add the debts that count: a four twenty car payment, one eighty student loan, 95 in card minimums, 300 in child support — nine ninety-five. The 250 personal loan has only eight payments left — fewer than 10, so it is excluded.

3,095 over 7,500: 41.27%. Third, per diem interest. A 250,000 dollar loan at 6% disburses March twentieth, and the lender collects prepaid interest through the end of the month on a 365 day year. Two fifty thousand times 6% is 15,000 a year; divided by three sixty-five, about 41 dollars and 10 cents a day.

March twentieth through the 30-first, counted inclusively, is 12 days. 12 days at that rate: 493 dollars and 15 cents. On a three sixty day year it would be 500 even — and that wrong answer is sitting right there in the options. Fourth, points.

A 410,000 dollar home, 20% down, a 1% origination fee plus one and a half discount points. Points are a percentage of the loan, never of the price. The loan is 80% of four ten: 328,000. Two and a half percent of that is 8,200 dollars.

Run the math on the sales price instead and you get ten thousand two fifty — the trap answer. Lock these in. Loan to value divides by the lesser of price or appraisal, and the combined ratio adds every lien. Installment debts with fewer than 10 payments remaining drop out of the back end.

Per diem interest counts the disbursement day through month end, inclusive, on the day-count the lender states. And points always ride on the loan amount, never the price. That closes origination activities — 27% of your exam, done. Next lesson: ethics, starting with fair lending in practice.

Practice every calculation free at quibank.com/en/mlo. See you in lesson 27.