Office of Loan Programs

Fee Comparison MOP vs
Conventional Loans
Jay Valancy
May 1999

No matter where we turn, from television newscasts to the Internet, we are confronted with information about mortgage interest rates. Generally, over the past fifteen years, the MOP interest rate has been lower than traditional lenders conventional mortgage rates (click here to see our chart comparing the historical MOP rate with conventional mortgage rates). However, that is only part of the story.

When comparing the MOP loan to loans offered by conventional lenders, it is important to compare apples to apples. Many conventional lenders advertise "no point" loans. A "point", as you may already know, is one percent of the loan amount or, $1,000 for every $100,000 of principal. For a "no point" loan, the borrower will not pay this up-front fee. However, the lender will charge a higher interest rate on the loan than if the borrower had paid points. With the MOP loan, the interest rate is generally below that of conventional lenders and "points" are not charged. The bottom line is lower cost to the MOP borrower without the additional up-front cost of "points"

Another frequently advertised loan type is the "no fees" loan. With this type of financing, the lender pays the closing costs associated with the loan, but once again, the borrower is charged a higher interest rate to compensate the lender. Conversely, some lenders will advertise their low rates, but will not detail the fees you pay the lender for obtaining those rates. These fees and costs have many names: credit reporting fee, document preparation costs, underwriting fee, tax contract, application fee, flood certification, processing fee, etc. For the MOP loan, in contrast, you only pay the cost of the property appraisal and any escrow or title company costs normally charged to a borrower in your area. To repeat, the University absorbs the cost of the credit report, tax contract and flood certification. We do not charge to process, underwrite or prepare loan documents. Remember, when comparing loans, compare apples to apples.

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