Calculating TIL Reimbursement

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Question:

How can I figure TIL reimbusement on an OCC APR WIN calculator for loans with interest only payments and all principal due at maturity with fixed rate? I am not sure what to list on my payment stream when each interest payment can be different each month.

Answer:

You base all disclosures and calculations on the terms of the legal obligation between the parties. If any information necessary for an accurate disclosure is unknown, you estimate.

In this case, no estimate is necessary because you know the outstanding principal amount, per diem rate, and number of days between payments. That's all it takes to calculate the dollar amount of each of the interest payments. Set up your calculations in a spreadsheet, and print the results to document your work.

After determining the payments, you have everything necessary for APRWIN to recalculate the APR and FC. Generally, you will load each payment separately. If you want to save an entry or two, it's OK to combine the Dec/Jan and Jul/Aug payments into two-payment streams. Absent any principal changes, the interest amounts in succeeding thirty-one day months will be the same.

First published on BankersOnline.com 11/29/10