Cash to close

Our next video focuses on the cash needed to buy a home. It is more than just the down payment. Let’s discuss closing costs.

To contact any of us at Dunwoody Mortgage Services, click here!

Does the APR really show the “truth” in lending?

The federal government requires the mortgage industry to use the Annual Percentage Rate (known as APR) for consumers to compare offers from mortgage companies. The idea behind its mandate is to provide a tool for consumers to use as an “apples to apples” way to compare loan offers. The lower the APR, the better the deal. Right?!?

Does the APR really do this? Well… I’ll defer to Tom and Jack from their “discussion” in A Few Good Men answer that question.

Well, the truth is the APR has great intentions, but it isn’t necessarily the best tool to use when evaluating loan offers. Here is why:

1. The APR is based on fees for services to get the loan closed. If the fees are estimated low early in the process and then increase, the APR would increase. With new laws in place, lenders have to disclose if the APR increases more than 0.125% from the original documents you sign. Still, if you’ve started with a lender, you are less likely to change course later on in the process if there is a slight increase in the fees. This is one way some choose to “lower” their APR on the initial offer to make it more competitive.
2. The APR assumes you will keep the loan for the life of the loan. For example, on a 30 year fixed mortgage, the APR shows its value over 30 years. If you payoff the loan early, sell the home, refinance, etc., the APR would then change. Since the APR could be impacted by how long you keep the mortgage, it stands to reason the APR may not be the best tool to use when trying to decide on a mortgage program.
3. The APR is somewhat useless on particular loan programs. Since the APR is based on the life of the loan in an “fixed/ideal” situation, any attempt to hone in on an accurate APR for an adjustable rate mortgage over the life of the loan is laughable. Since ARMs can adjust (typically) up to as much as 5% higher than the initial rate over the life of the loan, how can one possibly figure an accurate APR?!? Also, many consumers choose to refinance their ARM loans prior to them adjusting, and that takes us back to the problem discussed in point #2.

The ARP is a tool for consumers to use, but it is not and should not be the deciding factor on what loan program/lender to choose. When comparing offers, always evaluate the interest rate, closing fees associated with the lender, and closing fees associated with the attorney. Those items are identified in lump sum totals on the good faith estimate.

Understanding the New Good Faith Estimate.

On January 1, 2010, the new standardized (nationalized) Good Faith Estimate went in to mandatory use.  The intent of the form was to create a standard disclosure for all mortgage providers — better allowing consumers to shop for a mortgage, make comparison of loan options, closing costs, etc.  In the first sense (to create a single standardized form), the new Good Faith Estimate has succeeded.  In a few other areas, the new form is a giant headache.  So, to help you understand the new 2010 Good Faith Estimate, here is the good, the bad and, well, what you need to know to avoid getting the previously mentioned headache (the ugly).

First, the good:

• the new form gives a very good summary of loan terms (I honestly think that it should be renamed “A Summary of Loan Terms and a Guarantee of Closing Costs” because that is actually what it is . . . there are only a few items on the form that are actual estimates — other costs must match the costs at closing exactly.  Other details on the GFE answer whether or not the loan has an adjustable rate feature, the possibility of negative amortization, a pre-payment penalty, a balloon payment, and if the lender requires you to have an escrow account.
• the costs on the estimate are categorized and then added together and placed in easy to find boxes.  For example, block A discloses all lender fees as one number = Adjusted Origination Charges 
• the “lender fees” quoted on the Good Faith Estimate (block A) must match at closing.  There are some conditions where the fees can change, but a change in conditions and in fees requires re-disclosure of a new good faith estimate and a three day waiting period before closing can occur.  Thankfully, the low-life business of mortgage bait-and-switch is dead (mostly).
• the interest rate (locking-in the rate) are clear and in writing — basically putting a time-line on how long the current offer is available.  Good idea, but a bit of a headache (read on to find out why)
• fees from required service providers (credit report, flood certification) are clearly outlined
• fees that consumers are able to shop for (title services and closing fees) are put in to a different line

Now, on to the bad:

• customers want to know “What are my total closing costs?”  On most previous Good Faith Estimates, the estimate broke out “closing costs” and “pre-paid expenses”, the new form doesn’t use those two categories.  IF THEY HAD, then consumers could see that the “pre-paid expenses” are going to be the same regardless of who does your mortgage financing (prepaid interest is based on the day you close, tax and insurance escrow are based on your actual tax and insurance amounts).  INSTEAD, the new form has a “Total Estimated Settlement Charges” which totals the “Adjusted Origination Charges” and the pre-paid interest, first year’s insurance and escrow funds.  So, in order to use this figure for any meaningful comparison, consumers need to make sure that each lender they are speaking with is using the same tax and insurance $$ amount. 
• the second thing customers want to know, “How much money will I need at closing?”  Well . . . it’s not on this form.

And the now the ugly:

• the new Good Faith Estimate was created in the hopes of helping consumers shop for a mortgage, but because the form guarantees the interest rate (for a certain time period) and guarantees the closing costs (they must be guaranteed for at least 10 days), and because the closing costs are a product of the interest rate (it’s a whole separate blog post as to why this is really NOT hard to understand), a Good Faith Estimate shouldn’t be given to a consumer until they have completed a loan application . . . so, in order to get 3 or 4 competing quotes, do you need to fill out 3 or 4 loan applications (and provide financial documentation, etc)?
• mortgage professionals are required to issue a Good Faith Estimate within three days after loan application and this should be documented by . . . oops, there’s no signature blank on the new form . . . documented by another form such as a “Good Faith Estimate confirmation of receipt” and then a form to confirm that you got that one, and a form to confirm you got that one (ad nauseum).

So, back to some more good news.  We have created a great tool for walking our clients through the process of getting preliminary figures, through loan application, and through the new Good Faith Estimate and to closing — in a way that keeps the intent of the new form = quote closing costs honestly (don’t hide fees or underquote fees), and quote a real interest rate (not like they do in the newspaper and some places online to get the phone to ring), and then, quite simply . . . keep your word.  Simple, honest, professional is still the key, despite a new, confusing to consumers, 3-page Good Faith Estimate (plus one more page for the itemization of costs, plus the page to confirm receipt of the Good Faith). 

Get your money for nothing – $0 closing costs.

So is there really such a thing as a loan with NO closing costs? Can you really get a mortgage for nothing (and your chicks for free)?

You certainly can . . . $0 in fees, but certainly at a price. And, for a lot of people — depending on a few factors — it may actually be the best way to refinance your mortgage.

An example is probably the easiest way to demonstrate a few options. Let’s assume that you have a $194,000 mortgage on a house valued around $250,000. Suppose you currently have an adjustable rate mortgage that was fixed for 5 years (a 5/1 ARM) and now after 4 years, it is soon to adjust. Based on today’s 1 year LIBOR index (and guessing at a 2.25% margin), your rate would adjust up to 7.5%, so you are pretty sure you need refinance.

On a refinance, there are really three ways to pay for the closing costs associated with the new loan. (For the purpose of this post, I’m just talking about closing costs; how to pay for the prepaid expenses and escrow money for the new loan are usually just a matter of personal preference).

One — you could pay for the closing costs in cash at closing. Over the course of my ten years in the mortgage business, I have never had anyone pay for their closing costs this way. At times, people who consider themselves to be hard-core consumer-guru follower-types like to ponder this option, but mainly just for nobility’s sake.

Two — you could increase the loan amount to cover the closing costs. If you financed the closing costs into the mortgage balance, you would end up with a total loan amount of approximately $200,000. Here’s how: the payoff on the old mortgage would be approximately $195,000 (because mortgage interest is paid in arrears, you have to add one month’s interest to your current loan balance of $194,000); and then add the payoff amount to the amount needed to cover closing costs — approximately $4,600 on a $200,000 mortgage. So in total . . . $194,000 loan balance + one month’s interest + $4,600 in closing costs = $199,600. At an interest rate of 5.875% for a 30 year fixed rate loan, the principle and interest payment would be $1,180 per month.

Or, three — you could increase the interest rate on the mortgage in order to cover all of the closing costs. People in the mortgage business refer to this scenario as a ‘lender-paid closing cost’ option or that the closing costs are being ‘paid through premium-pricing’ (on the radio, the guy likes to make it sound like he invented this third option and that he’ll do a loan for you with $0 in costs partly out of the goodness of his heart and partly because everyone else in the world is a ‘racket and a rip-off’ — what a generous fella). Essentially, in this scenario, the borrower accepts a higher-than-market interest rate to cover the closing costs. This higher rate causes the investor to pay the mortgage broker enough money to cover all of the closing costs (or the entire $4,600). The good news is that if you cover your closing costs this way, your loan balance would be equal to your payoff amount only, or $195,000. To continue the example, in this scenario, the interest rate would need to be moved up to 6.625% (better than the soon to be adjusted to rate of 7.5%). And at that rate, the principle and interest payment would be $1,248 per month.

The difference between option two (with closing costs) and option three (no closing costs) is $4,600 in costs and $68 per month. So which is the better option?? Well . . . it depends on your plans for the future. If you do the straight-forward math, in order to break-even on the expense of the $4,600 in closing costs at a $68 per month difference in payment, you would need to keep the loan for 67 months (or 5.6 years).

So, if you are going to be in the house (or keep the loan) for more than 5.6 years, you would be better to increase the loan amount to finance the closing costs and take advantage of the lower rate (option two). If you are planning on being in the house (or keeping the loan) for less than 5.6 years, you would be better off taking the higher rate and the $0 in closing costs (option three). This math will vary based on the size of the loan and available interest rates and is generally only available (because of the way investors price loans) for fixed rate mortgages.

Another advantage of the ‘no cost’ option is that if interest rates move lower, you can refinance again (either with costs or without closing costs) without kicking yourself for having spent the extra $4,600 in closing costs. Of course, if rates go up, and you end up living in the house for more than 5.6 years, you’ll wish you had taken the lower rate, spent the extra $$ in closing costs and saved yourself the $68 per month . . . which by the way . . . over 10 years will cost you an additional $8,160 . . . and over 30 years will cost you an additional $24,480, ouch.

So, I guess you really can’t get your money for nothing . . . but, hey, the clicks (here on ‘the mortgage blog’) are free.

Could you please just “show me the money?”

“SHHOOOOOWWWWW MMMEEEEEEE THE CLOSING COSTS!!! . . . . . . . . . . I LOVE THE LOAN ORIGINATOR!!!”

By definition, a Good Faith Estimate (GFE) is a disclosure (required by the Real Estate Settlement Procedures Act (RESPA) to be given at the time of loan application, which lists the charges the buyer is likely to pay at settlement.

The good faith estimate is (in theory) designed to be an easy way for consumers to compare different offers from different mortgage companies. Unfortunately, there are a few problems in trying to compare good faith estimates . . . a few of which I will try to help decipher today.

problem # 1 — the prepaid expenses vary based on different factors — how the homeowner’s insurance is estimated, how the taxes are estimated, the per diem interest based on the day of closing (interest is paid from the day of closing through the end of the month) and how the escrow account is estimated. When comparing good faith estimates, you can ignore the prepaid expenses.

problem # 2 — different loan amounts means different closing costs. Some of the closing costs are a percentage of the loan amount (the origination fee, any discount points, the title insurance and, for consumer borrowing in Georgia, the Georgia intangible tax are all a percentage of the amount financed). When comparing good faith estimates, make sure the estimates are for the same loan amount.

problem # 3 — different closing dates will cause the interest rate to change. Once you have a contract on a house, you are able to ‘lock-in’ or protect your interest rate. The interest rate is dependent on the lock-in period (usually 15 days, 30 days, 45 days, 60 days, 90 days or 120 days) — the longer the lock-in period, the higher the interest rate. When comparing interest rates from different lenders, make sure that everyone is quoting the same ‘lock-in period.’ This is the reason why most of the lowest rates in the newspaper and on fakerate.com (fictitious website . . . although curiously similar in sound) will have the lowest interest rates.

problem # 4 — some loan originators (who must already know that their fees are too high) seem to hide fees in strange places on the good faith estimate. Every now and then I will have clients send me a competitors good faith estimate. This works out well — the client makes sure that we are comparing everything accurately (pineapples to pineapples), and I get to see how I measure-up to the competition, helping me make sure that I am always absolutely competitive (track back: “I can’t be beat . . .” ). Things to look for — an application fee not included in the ‘total closing costs’; the ‘total closing costs’ being only a total of lender fees (and not including settlement agent/attorney related fees); the appraisal and/or credit report fee listed as upfront fees or POC fees (paid outside of closing) and not included in total.

problem # 5 — Theoretically, you could compare the APR’s of different loan scenarios to find the ‘best deal.’ Unfortunately, the APR calculation is anything but standard and without going into all of the tedious details, just trust me, APR just isn’t an accurate tool to measure your options side-by-side.

problem # 6 — if you do not yet have a contract on a house, you can’t really lock-in on an interest rate or loan program. And because interest rates change daily (or even in the middle of the day depending on the market), estimates must be compared based on information from the same day. (As an aside, one competitor told a client of mine that it would take them a day or two to get them a good faith estimate?? . . . or that their manager had to approve the good faith estimate and that is why it took them two days to send it to them?? What!!?? These people are either too busy to help (which I would argue is probably more of an organizational problem), or they are part-time loan originators, or they are so new in the business that they can’t create a good faith estimate without proper supervision — if you encounter any of these situations . . . RUN FOR YOUR LIFE!! Ok. Maybe just, walk away . . . quickly.

Could you please just "show me the money?"

“SHHOOOOOWWWWW MMMEEEEEEE THE CLOSING COSTS!!! . . . . . . . . . . I LOVE THE LOAN ORIGINATOR!!!”

By definition, a Good Faith Estimate (GFE) is a disclosure (required by the Real Estate Settlement Procedures Act (RESPA) to be given at the time of loan application, which lists the charges the buyer is likely to pay at settlement.

The good faith estimate is (in theory) designed to be an easy way for consumers to compare different offers from different mortgage companies. Unfortunately, there are a few problems in trying to compare good faith estimates . . . a few of which I will try to help decipher today.

problem # 1 — the prepaid expenses vary based on different factors — how the homeowner’s insurance is estimated, how the taxes are estimated, the per diem interest based on the day of closing (interest is paid from the day of closing through the end of the month) and how the escrow account is estimated. When comparing good faith estimates, you can ignore the prepaid expenses.

problem # 2 — different loan amounts means different closing costs. Some of the closing costs are a percentage of the loan amount (the origination fee, any discount points, the title insurance and, for consumer borrowing in Georgia, the Georgia intangible tax are all a percentage of the amount financed). When comparing good faith estimates, make sure the estimates are for the same loan amount.

problem # 3 — different closing dates will cause the interest rate to change. Once you have a contract on a house, you are able to ‘lock-in’ or protect your interest rate. The interest rate is dependent on the lock-in period (usually 15 days, 30 days, 45 days, 60 days, 90 days or 120 days) — the longer the lock-in period, the higher the interest rate. When comparing interest rates from different lenders, make sure that everyone is quoting the same ‘lock-in period.’ This is the reason why most of the lowest rates in the newspaper and on fakerate.com (fictitious website . . . although curiously similar in sound) will have the lowest interest rates.

problem # 4 — some loan originators (who must already know that their fees are too high) seem to hide fees in strange places on the good faith estimate. Every now and then I will have clients send me a competitors good faith estimate. This works out well — the client makes sure that we are comparing everything accurately (pineapples to pineapples), and I get to see how I measure-up to the competition, helping me make sure that I am always absolutely competitive (track back: “I can’t be beat . . .” ). Things to look for — an application fee not included in the ‘total closing costs’; the ‘total closing costs’ being only a total of lender fees (and not including settlement agent/attorney related fees); the appraisal and/or credit report fee listed as upfront fees or POC fees (paid outside of closing) and not included in total.

problem # 5 — Theoretically, you could compare the APR’s of different loan scenarios to find the ‘best deal.’ Unfortunately, the APR calculation is anything but standard and without going into all of the tedious details, just trust me, APR just isn’t an accurate tool to measure your options side-by-side.

problem # 6 — if you do not yet have a contract on a house, you can’t really lock-in on an interest rate or loan program. And because interest rates change daily (or even in the middle of the day depending on the market), estimates must be compared based on information from the same day. (As an aside, one competitor told a client of mine that it would take them a day or two to get them a good faith estimate?? . . . or that their manager had to approve the good faith estimate and that is why it took them two days to send it to them?? What!!?? These people are either too busy to help (which I would argue is probably more of an organizational problem), or they are part-time loan originators, or they are so new in the business that they can’t create a good faith estimate without proper supervision — if you encounter any of these situations . . . RUN FOR YOUR LIFE!! Ok. Maybe just, walk away . . . quickly.

You give [my good faith estimate] a bad name.

In an ever increasing competitive business and with increasingly cautious buyers, the Good Faith Estimate (GFE) has become much more than just an estimate. At the beginning of the loan process, the GFE is what loan-shoppers use (and should be using) to compare different offers from different lenders; and after the closing (and even at the closing table) it becomes the measuring-stick for borrowers to test whether or not they “got the deal” they were told they were getting.

Certainly there exists a small percentage of idiots, crooks and criminals — those who lack any moral-compass whatsoever — in the business who will intentionally quote a customer one thing and deliver another. And, hopefully, through the process of bad-business and self-elimination, they will continue to weed themselves out of the business — only to be forced back into their old jobs as used-car salespeople and vinyl-siding salesmen (sorry car-guys; no apology for the siding-guys). If you have taken my advice in how to do your shopping, I would hope this will not be an issue. If you feel like you have been told one-thing and sold another, you should (until you are satisfied with the answer) take it up with the loan originator first, then with his or her manager, then to the next management level up, and on to the state regulatory division for mortgage companies (in Georgia, it is the Georgia Banking and Finance Department).

For this post, let’s assume that you are working with a decently-well-meaning mortgage professional. Is it possible, or reasonable, to be quoted one thing at the time of loan application (and good faith estimate) and then be delivered something different at the closing table?? Yes, it is. And here is why . . .

On a good faith estimate there are a few categories of fees.

1 — lender/mortgage company fees — these fees include things like the origination fee, processing fee, underwriting fee, tax service fee, etc. These fees should NOT vary when compared to the original good faith estimate, unless the loan amount has changed; origination and discount points are a percentage of the loan amount. (As an aside: please don’t be fooled by the “$0 in lender-fees” or the “only $799 in lender-fees” advertisements; they are a variation of the whole 1% origination vs. 0% origination discussion).

2 — third-party fees — these fees are set-fees charged by other parties related to the processing of the loan. Examples include the credit report fee, the appraisal fee, and the flood certification fee. These are ‘generally-set-fee’ services. Most should be identical to the good faith estimate, but there are a few small exceptions. For example, I quote $250 for an appraisal fee, but in a few outlying counties or in the North Georgia mountains, where data is harder to come-by, the appraisers I use charge a little bit more — like $300. Or, in the case of new construction, if the property is not 100% complete at the time the appraiser goes to the house, the appraiser has to go back out for a final inspection and there is a small fee associated with that work (usually $50 to $100). In the instance of generally-set fees, I have a responsibility to manage those relationships to help my clients get the best service at the best prices.

3 — state related fees — these fees vary from state to state. In Georgia, borrowers pay a tax on the amount of money borrowed, at a price of $3.00 per $1,000 of the loan amount called the Georgia intangible tax, as well as a $6.50 fee paid to the state for every loan.

4 — prepaid expenses — per diem interest, one-year pre-paid insurance and funds to set up the escrow account. These figures are totally estimated on the good faith estimate and will vary based on a number of factors: the calendar day of closing, the actual insurance premium for the policy you choose, and the actual amount of the property taxes. At closing, these costs will be the same regardless of who you have chosen to use for your mortgage financing.

5 — attorney, title and closing related fees — these fees are associated with the title work and closing of your loan (and are the main focus for this post, although I realize it has taken me a while to get here). Certainly, attorney-related fees are also third-party fees, but I put them in their own category for good reason. The attorney controls the prices of many of the costs at closing — the attorney’s fee, the title search fee, the lender’s title insurance premium and the owner’s title insurance premium, recording-type fees and any other ancillary fees associated with the closing — all determined by the closing attorney. So, who determines the closing attorney??

The attorney’s role (or title company in some states) is to represent the lender in the transaction. In the past, the closing attorney for the transaction was usually selected by the lender (or mortgage company). This allowed mortgage professionals to manage those third-party relationships, helping clients (or at least being responsible to helping their clients) get the best service at a competitive price. With the recent epidemic of joint-venture title companies (where a Real Estate company will form a title company in partnership with a closing attorney) more and more transactions are being closed at attorney’s offices chosen by the Realtor. This is not necessarily a bad thing, but it has the potential to be.

The issue becomes a problem when the fees charged by the attorney are drastically different than the fees quoted on the good faith estimate. I make it a point to tell all of my clients that if I am able to choose the closing attorney, then I can absolutely guarantee all of the costs on my good faith estimate; however, if the closing attorney is chosen by anyone else, then the costs could and most-likely will, vary. Thankfully, the firm that I use (when given the choice) has 40+ offices in Georgia and is the largest real estate closing firm in the southeast — I have a great working relationship with them and the fees I quote are the fees they charge my clients.

Bottom-line: Before you agree to use a closing attorney chosen by someone other than your lender, ask your loan officer to check-out how that decision is going to affect your bottom-line at closing. It may seem like a decision that is small, harmless and somewhat meaningless . . . but, at first-look, so do the phrases ‘tax search fee = $10’, ‘courier fee = $50’, ‘binder fee = $75’, ‘document handling fee = $40’, ‘post-closing fee = $50′, ’email fee = $15′ (idiotic, but true). Add those costs to an extra $50 on the attorney fee, an extra $25 on the title search, an extra $50 on the lender’s title insurance and an extra $50 on the owner’s title insurance premium . . . and you just spent an extra $400 at the closing table . . . and with that, there goes your new self-gifted housewarming-present 80 gig video iPod . . . loaded up with your favorite 80’s rock-n-roll.

Hence the tribute . . .

(sing) ” Your post-closing-fees got a hold on me . . . more fees on the HUD, and you’re to blame. You give my good-faith a bad name. I quoted my fees, not knowing your name, you give my good-faith a bad name. Yeah, you give my good-faith a bad name.”

0% origination fee — deal? or no deal?

A good faith estimate with 0% origination fee? or the guy on the radio who promises a loan with no closing costs? There is just really one question to ask (dramatic pause) . . .

Deal . . . or no deal?

In shopping for a mortgage, one of the first things that you should understand is that there is a direct correlation between the $$ amount of closing costs you will pay and the interest rate that you will receive. The higher the closing costs, the lower the rate. The lower the closing costs, the higher the rate. This truth is fairly obvious when comparing origination fees and discount points on competing options from different companies. In the newspaper for example, if you find the lowest interest rate in the Sunday rate-finder section, and move across the row to the right, you will find that the listing with the lowest interest rate has the highest origination/discount points. (1% origination or 1% discount point is a cost of 1% of the loan amount. For example, on a $200,000 loan, a 1% origination fee would cost $2,000 in closing costs.)

So which is better — the lower rate? the higher closing costs? no closing costs at all?

In most purchase situations, it makes the most sense to pay the 1% origination fee in order to get the lowest interest rate. Here is some simple math to help show the difference between two options based on a $200,000 loan amount.

Option # 1: 1% origination fee at 6.0% interest rate.

Option # 2: 0% origination fee at 6.375% interest rate.

The difference between the two options would be $48 a month in payment and $2,000 in closing costs. $2,000 divided by $48 per month = 41.6 months, or about 3.5 years. In other words, if you are going to keep the loan for more than 3.5 years, the better decision is to pay the 1% origination fee and take advantage of the lower interest rate.

For the over-analyzing-microsoft-exel-a-nator, (made-up word) you could probably build a spreadsheet (and drive yourself moderately insane) by running out the scenario by taking what would have been the $2,000 in origination fee and calculating the “what-if” for putting that money in a 4.0% money market account for 3.5 years (where the gain would be taxable); and then add in the fact that at the higher interest rate, you are going to pay a slight bit more tax-deductible interest, where the $48 per month difference really works out to be closer to a net of $38 per month difference . . . and the $2,000 in closing costs would have grown to $2,290 (or so) over 3.5 years, but after taxes would be more like $2,240. And NOW (whew), do the math . . . $2,240 divided by $38 per month = 59 months . . . or just shy of 5 years. And, like I mentioned before, in a purchase transaction, this would make sense (the average time for a person to live in a home is around 6 to 7 years).

The same type of math works with a “no-cost” option — where the interest rate is moved up in order lender-pay all of the closing costs. This type of set-up (higher rate, no closing costs) usually works best on a refinance for people who are looking for a fixed-rate mortgage and who are only planning on being in the house for another 2 to 3 years.

So, before you jump at the idea and accept a 0% or 0.5% origination fee, make sure you are doing a fair comparison of closing costs, points and interest rate. The “deal” of a 0.5% origination — combined with a higher than market interest rate for the life of the loan — could be no deal at all.