Definition
A higher-priced mortgage loan is a mortgage where the APR is significantly higher than the average rate for a similar loan. These loans are subject to special regulatory requirements and are typically offered to borrowers with a higher risk profile.
Understanding Higher-Priced Loans
Often appearing during the loan approval stage, higher-priced mortgage loans can have slightly higher interest rates than typical loans. This occurs when the annual percentage rate (APR) exceeds a benchmark by a certain margin. In simple terms, it may mean higher monthly payments. Example: If a regular loan has a 5% APR, a higher-priced mortgage loan might be 6% or more. It's not necessarily a negative point. Some borrowers might qualify for these loans due to unique financial situations. It's important to note that a higher-priced loan is not the same as a subprime loan; it simply falls outside certain standard thresholds.
