Office of Loan Programs
University of California
Office of the President
1111 Franklin St., 6th Floor
Oakland, CA 94607-5201
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 ( 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.