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Loan Application Process Overview

Vidal meets with banker Sebastián to apply for a $200,000 loan to buy an apartment, agreeing on a 12% interest rate and a 10-year term with $2,500 monthly payments. Vidal offers his current apartment as collateral and has a credit score of 750, while the loan agreement includes a 1% origination fee and a 2% prepayment penalty. They discuss options for default, early payment, refinancing, and a 3-month grace period before payments begin.

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5 views2 pages

Loan Application Process Overview

Vidal meets with banker Sebastián to apply for a $200,000 loan to buy an apartment, agreeing on a 12% interest rate and a 10-year term with $2,500 monthly payments. Vidal offers his current apartment as collateral and has a credit score of 750, while the loan agreement includes a 1% origination fee and a 2% prepayment penalty. They discuss options for default, early payment, refinancing, and a 3-month grace period before payments begin.

Uploaded by

dianac.vizcarrag
Copyright
© All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd

A client (Vidal) meets with a banker (Sebastián) to apply for a loan.

*Vidal:* Good morning, Maria. I am interested in applying for a loan to buy an apartment.

*Sebastian:* Hi John! Sure, I'll be happy to help you. How much capital do you need?

*Vidal:* I need $200,000.

*Sebastian:* Have you checked our interest rates?

*Vidal:* Yes, I saw that they have a 12% annual percentage rate (CAPR).

*Sebastian:* Correct. And what loan term were you thinking of?

*Vidal:* 10 years.

*Sebastian:* Excellent. The amortization would be $2,500 per month. Do you have any collateral to
offer?

*Vidal:* Yes, I can offer my current apartment as collateral.

*Sebastian:* Great. Secured loans have better interest rates than unsecured ones. Do you know
what your credit score is?

*Vidal:* Yes, it's 750. *Mary:* Very good. The debt-to-income ratio CDTD is important to us. What
is your monthly income?

*Vidal:* $6,000.

*Sebastian:* Excellent. The loan agreement includes a 1% origination fee and a 2% prepayment
penalty. We will also have a monthly payment schedule.

*Vidal:* I understand. What if I can't pay a monthly payment?

*Sebastian:* In the event of default, we can work together to find a solution. We can also require a
cosigner.

*Vidal:* What if I want to pay off the loan early?

*Vidal:* You will be able to make a balloon payment without penalty after 5 years.

*Sebastian:* Would you like to refinance the loan in the future?

*Vidal:* Yes, I would like to have that option.

*Sebastian:* Sure. And we have a 3-month grace period so you can start paying after receiving the
loan.
*Vidal:* Excellent. I'm ready to sign the contract.

*Sebastian:* Great. I'm here to help you through the entire process.

concepts: 1. Principal ($200,000) 2. Interest rate (12% CAPR) 3. Loan term (10 years) 4.
Amortization ($2,500 per month) 5. Collateral (current apartment) 6. Secured vs. Unsecured 7.
Credit Scores (750) 8. Debt-to-Income Ratio CDTD 9. Loan Agreement 10. Origination Rate (1%) 11.
Prepayment Penalty (2%) 12. Payment Schedule 13. Default 14. Cosigner 15. Balloon Payment 16.
Refinancing 17. Grace Period (3 months)

Team: Sebastián Rohan, Vidal Varela

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