Q: Do we input what the max rate adjustment will be or what the maximum rate will be? I have a start rate of 3.375% and caps of 5/2/5. Do I put 5% or 8.375% in this field?
A: You would put in 8.375 for that field. Keep in mind that if you choose worst case for the scenario and your first adjustment is 5%, it will hit the life cap immediately and stay there for the remainder of the loan. This will produce a very high APR (we use the payment stream to produce the APR, while your TIL will only base it on index plus margin), so make sure you know how to explain it when talking to your borrower.