Q: Is the Adjustable Payment (AP) table completed for a construction loan?
A: When a construction-permanent loan is disclosed as one transaction, the Adjustable Payment (AP) table must be disclosed if the construction phase permits interest-only payments. The table is required to be disclosed because the transition from interest-only payments to payments of principal and interest will be present. The Adjustable Payment (AP) is disclosed as it would be for any other loan, but the creditor may omit and leave blank the amount or range corresponding to the first periodic principal and interest payment that may change.
For example, because the interest-only period during the 12-month construction phase has a total amount advanced upon which the interest-only payments are based that adjusts monthly, the creditor would make the following disclosures in the Adjustable Payment (AP) table:
For more information on this topic, see section 2.3.5 of the TILA-RESPA Guide to Forms.