You will find the Loan Terms section in the Financing Menu > Financing Tab, housing the Estimated Monthly Payment, Term Months, Amortization Months, and Interest-Only Months fields, depending on loan category type:

• 504 category loan  > TPL record 
• 7A/Commerical category loans > Primary Loan record and added Financing Sources loan records

DEFINITIONS

Term Months = number of months borrower will be making payments

Amortization Months = number of months you are amortizing  to calculate a payment amount

Interest-Only payments = number of months borrower will be making interest-only payments

***TIP: Click on the ? for more information about the Estimated Monthly Payment field***

HOW IT WORKS

1) The Term Months field reflects the total number of payments the borrower will be making of any payment type (P&I, Interest Only, etc).

2) The Estimated Monthly Payment is based on Gross amount, the estimated rate, year basis and amortization months. The payment also factors in the Monthly Servicing Fees, in any. If year basis is -Not Set-, then the system will default to a 30/360 basis. The amortization calculation assumes the loan funds on the 1st of the month that it is currently. For example, if it is October 15th, and you are entering in the loan terms, the amortization calculation will assume October 1st is the funding date and November 1st is the first payment date. Click on the ? next to Monthly Payment for more information.

3) Interest-Only Months field subtracts from the Amortization months when calculating the number of months to amortize for the Monthly Payment amount of P&I. The Monthly Payment does not include accrued interest from the Interest Only months (if applicable), and will not calculate an interest only amount unless the Amortization Months value matches Interest-only Months value (see Example 4).
 

EXAMPLE 1

Scenario 

Borrower is scheduled to make Interest Only (IO) payments for 18 months. After the IO period, the borrower is going to make Principal and Interest (P&I) payments for 300 months.

Set Up

• Loan Term is 318 because the borrower will be making a total of 318 payments
• Amortization months is 318
• Interest Only months is 18
• 318 Amortization Months - 18 Interest Only Months = 300 remaining Amortization Months to calculate a P&I amount. The system is not calculating the interest payments in the Monthly Payment field, it is looking for the amount of P&I months after IO (if any) payments.

EXAMPLE 2

Scenario 

Borrower is making 18 IO payments. After the IO period, the borrower will make 282 P&I payments.

Set Up

• Loan Term is 300 because the borrower will be making a total of 300 payments
• Amortization months is 300
• Interest Only months is 18
• 300 Amortization Months entered - 18 Interest Only months =  282 remaining Amortization Months to calculate a P&I amount. The system is not calculating the interest payments in the Monthly Payment field, it is looking for the amount of P&I months after IO (if any) payments.

EXAMPLE 3

Scenario 

Borrower is making 300 P&I payments.

Set Up

• Loan Term is 300 because the borrower will be making a total of 300 payments
• Amortization months is 300
• Interest Only months is 0
• 300 Amortization Months entered - 0 Interest Only months = 300 Amortization months to calculate a P&I payment. The system is not calculating the interest payments in the Monthly Payment field, it is looking for the amount of P&I months after IO (if any) payments.

EXAMPLE 4

Scenario 

Borrower is making 12 months of Interest Only payments initially, and Lender wants to calculate Interest Only estimated payment amount.

Set Up

• Loan Term field does not affect calculation
• Amortization months is 12
• Interest Only months is 12
• 12 Amortization Months entered - 12 Interest Only months = system will calculate an IO payment.