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How do I know what my loan rate will be? |
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Why are your rates different from those in the newspaper? |
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What are the costs that are included in my loan payment? |
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Tell me more about mortgage loan closing fees and how they are determined. |
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Do your loans have prepayment penalties? |
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Do I have to have an impound account? |
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What is the minimum down payment required? |
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What is the maximum debt-to-income ratio? |
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What is the minimum FICO score? |
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Can I set up a direct debit to make my monthly payment? |
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Can I make a bi-weekly payment? |
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Can I make extra principal payments so I can pay off the loan more quickly? |
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What about easy qualifier loans that do not require as much supporting documentation? |
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What is the maximum percentage of my home's value that I can borrow? |
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How do I calculate my Loan-to-Value ratio (LTV)? |
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Can I subordinate my current second mortgage? |
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How much can I borrow on a second mortgage? |
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Can I spend the funds received on a second mortgage for any purpose? |
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How do I determine the points I want to pay? |
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How much money will I save by choosing a 15 year loan rather than a 30 year loan? |
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How are interest rates determined? |
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How do I know if it's best to lock in my interest rate or to let it float? |
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What determines the cost of a mortgage? |
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How can a shorter term save me money on a Fixed-Rate Mortgage? |
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How does an ADJUSTABLE RATE MORTAGE work? |
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How is "Start rate" different from "Qualifying rate"? |
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How is start rate different from APR? |
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What is an intermediate fixed rate mortgage? |
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Why offer a balloon loans? |
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Why pay points? |
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When do I select a zero point option? |
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How do I know what my loan rate will be? |
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Rates vary primarily based on the type and purpose of the loan,
your credit history and income, loan amount, value of the
property, and the number of points you are willing to pay.
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Why are your rates different from those in the newspaper? |
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If you compare our loan rates to those in newspapers and other print
publications, please bear in mind that the rates in these publications
may have been reported one or more days ago (sometimes a week ago
with a Sunday paper), and may no longer be available.
- Rates on this site are updated each business day, and often
several times a day. Consumers that have loan shopped extensively
have told us that we offer some of the most competitive rates
around - both on and off the Web.
- Note that the rates are personalized according to answers you
give us. Newspaper rates are not tailored to your individual
needs and circumstances.
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What are the costs that are included in my loan payment? |
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At the least, your loan payment will consist of the principal
and interest for one month. In some states you may elect to
have your insurance and taxes prorated and added onto the
monthly cost. In other states, it may be required that you
pay for insurance taxes as part of your loan monthly payment.
This money should be placed in an impound or escrow account
by the lender.
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Tell me more about mortgage loan closing fees and how they are determined. |
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A home loan often involves many fees, such as the appraisal
fee, title charges, closing fees and state or local taxes.
These fees vary from state to state and also from lender to
lender. Any lender or broker should be able to give you an
estimate of their fees, but it is more difficult to tell which
lenders have done their homework and are providing a complete
and accurate estimate. Shearsons Mortgage takes fee quotes very
seriously. We've completed the research necessary to make sure
that our fee quotes are accurate to the city level - and that
is no easy task!
To assist you in evaluating our fees, we've grouped them as follows:
Third Party Fees
Fees that we consider third party fees include the appraisal fee,
the credit report fee, the settlement or closing fee, the survey
fee, tax service fees, title insurance fees, flood certification
fees, and courier/mailing fees.
Third party fees are fees that we'll collect and pass on to the
person who actually performed the service. For example, an
appraiser is paid the appraisal fee, a credit bureau is paid
the credit report fee and a title company or an attorney is paid
the title insurance fees.
Typically, you'll see some minor variances in third party fees
from lender to lender since a lender may have negotiated a
special charge from a provider they use often or chooses a
provider that offers nationwide coverage at a flat rate. You
may also see that some lenders absorb minor third party fees
such as the flood certification fee, the tax service fee or
courier/mailing fees.
Taxes and Other Unavoidables
Fees that we consider to be taxes and other unavoidables include:
State/Local Taxes and recording fees. These fees will most likely
have to be paid regardless of the lender you choose. If some
lenders don't quote you fees that include taxes and other
unavoidable fees, don't assume that you won't have to pay it.
It probably means that the lender who doesn't tell you about the
fee hasn't done the research necessary to provide accurate closing
costs.
Lender Fees
Fees such as discount points, document preparation fees and loan
processing fees are retained by Shearsons Mortgage and are used to
provide you with the lowest rates possible.
This is the category of fees that you should compare very closely
from lender to lender before making a decision.
Required Advances
You may be asked to prepay some items at closing that will actually
be due in the future. These fees are sometimes referred to as prepaid
items.
One of the more common required advances is called "per diem interest"
or "interest due at closing" . All of our mortgages have payment due
dates of the 1st of the month. If your loan is closed on any day other
than the first of the month, you'll pay interest, from the date of
closing through the end of the month, at closing. For example, if the
loan is closed on June 15, we'll collect interest from June 15 through
June 30th at closing. This also means that you won't make your first
mortgage payment until August 1st. This type of charge should not vary
from lender to lender, and does not need to be considered when comparing
lenders. All lenders will charge you interest beginning on the day the
loan funds are disbursed, it is simply a matter of when it will be
collected.
If an escrow or impound account will be established, you will make an
initial deposit into the escrow account at closing so that sufficient
funds are available to pay the bills when they become due.
If your loan requires mortgage insurance, the first month or so of
the mortgage insurance will be collected at closing. Whether or not
you must purchase mortgage insurance depends on the size of the down
payment you make.
If your loan is a purchase, you'll also need to pay for your first
year's homeowner's insurance premium prior to closing. We consider
this to also be a required advance.
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Do your loans have prepayment penalties? |
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Prepayment penalty is for the first 5 month only! We only
charge you a prepayment penalty if you payoff our loan within
the first 5 month of closing your loan. This is to discourage
early payoffs and to protect our investors from churning / flipping
of loans.
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Do I have to have an impound account? |
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None of our programs require you to have an impound account unless the
Loan-to-Value ratio is over 80%.
Even then, impounds can be waived on some programs.
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What is the minimum down payment required? |
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The minimum down payment required for our programs is 5% of the purchase price.
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What is the maximum debt-to-income ratio? |
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On conforming loans, there is no maximum debt to income ratio.
With good compensating factors, we have approved loans with
ratios as high as 70%. On jumbo loans, the maximum debt to
income ratio is 40% to 50% depending on the loan program.
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What is the minimum FICO score? |
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On conforming loans, the minimum FICO score is 580, with FICOs
between 580 and 620 having slightly higher rates. On jumbo loans,
the minimum acceptable FICO score is 620, with FICO between 620
and 660 having slightly higher rates.
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Can I set up a direct debit to make my monthly payment? |
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Most of our services allow you to set up a direct debit to make your monthly
payment. Upon receiving notification regarding the servicer for your loan,
contact the toll-free number provided to set up your direct debit.
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Can I make a bi-weekly payment? |
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Many of our servicers allow you to set up bi-weekly payments.
However, you should seriously weigh the merits of this program before
setting it up. A bi-weekly payment program pays off the mortgage early
by making 13 payments each year (52 weeks in a year divided by 2
equals 26 half payments or 13 full payments).
By simply paying an extra 1/12 of a payment each month, you will
pay your mortgage off faster and avoid any administration fees
associated with the biweekly payment program. Use our Mortgage Loan
Calculator to set up a prepayment schedule that is right for you.
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Can I make extra principal payments so I can pay off the loan more quickly? |
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Depending on the loan, and what your state permits, it is feasible
for you to make extra payments on the loan. Extra payments will
have an effect on the amortization schedule over the remaining
term of your loan.
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What about easy qualifier loans that do not require as much supporting documentation? |
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It all depends on your FICO and Loan-to-Value. These loan
programs are becoming increasingly popular but have slightly
higher rates.
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What is the maximum percentage of my home's value that I can borrow? |
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The maximum percentage of your home's value depends on the
purpose of your loan, how you use the property, and the loan
type you choose. Generally you can borrow more for a property
that you occupy as your primary residence than you can borrow
for a vacation home or an investment property. It also makes a
difference whether your looking to purchase a new home or refinance
a home you already own.
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How do I calculate my Loan-to-Value ratio (LTV)? |
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The Loan-to-Value ratio (or LTV) is one of the most important
factors in your loan process. It is used to determine the limits
within which your Housing and Debt ratios must fall for you to be
approved. It can also determine which fees you will be charged for
your loan, and the amount of these fees. It will also determine
whether you must pay Private Mortgage Insurance (PMI) and use an
Impound/Escrow Account.
Loan-to-Value ratio (LTV) is simply the amount you are borrowing
divided by the value of the subject property you are purchasing or
refinancing. This gives you a simple ratio. The value of your
property is its appraised value OR the amount you pay for the
property whichever is lower. In the initial stages of qualification
and approval, your property's value is understood to be an estimate.
It will be confirmed, if necessary for your particular loan, by a
professional appraiser hired by Shearsons Mortgage.
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Can I subordinate my current second mortgage? |
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While it is possible to subordinate your current second mortgage,
the extra time your current lender requires to process the
subordination request could cause your loan process to extend past
your rate lock period resulting in a repricing of your loan.
Because Shearsons Mortgage offers low rate second mortgages, a better
option may to pay off your current second mortgage with a new loan.
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How much can I borrow on a second mortgage? |
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Shearsons Mortgage offers second mortgage programs up to $250,000
and up to 100% of the value of your home. The higher the
loan-to-value ratio, the higher the interest rate.
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Can I spend the funds received on a second mortgage for any purpose? |
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Yes.
There are no restrictions to how the funds are used.
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How do I determine the points I want to pay? |
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Points are paid when the loan closes, not at the time you apply
for the loan. Generally speaking, points are fees added on to loans.
One point equals 1% of the loan amount.
When you get a loan, you'll have the opportunity to "buy down"
the interest rate by paying discount points - essentially paying
a fee to lower your interest rate.
By lowering your interest rate, you will be lowering your monthly
payment and the amount of interest you'll be paying over the life
of the loan. You pay more at the beginning of your loan but will
save money in the long run. Keep this in mind as you determine
whether to pay points.
Paying points requires a higher immediate expenditure, so it may
not be for you. In that case, let the loan do its job - allowing
you to borrow the money you need and pay it back as you can.
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How much money will I save by choosing a 15 year loan rather than a 30 year loan? |
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A 15-year fixed-rate mortgage gives you the ability to own your
home free and clear in 15 years. And, while the monthly payments
are somewhat higher than a 30-year loan, the interest rate on the
15-year mortgage is usually a little lower, and more importantly - you'll
pay less than half the total interest cost of the traditional
30-year mortgage.
However, if you can't afford the higher monthly payment of a 15-year
mortgage don't feel alone. Many borrowers find the higher payment out
of reach and choose a 30 year mortgage. It still makes sense to use a
30 year mortgage for most people.
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How are interest rates determined? |
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Interest rates fluctuate based on a variety of factors,
including inflation, the pace of economic growth and Federal
Reserve policy. Over time, inflation has the largest influence
on the level of interest rates. A modest rate of inflation will
almost always lead to low interest rates, while concerns about
rising inflation normally cause interest rates to increase.
Our nation's central bank, the Federal Reserve, implements
policies designed to keep inflation and interest rates
relatively low and stable.
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How do I know if it's best to lock in my interest rate or to let it float? |
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Mortgage interest rate movements are as hard to predict as the
stock market and no one can really know for certain whether
they'll go up or down.
If you have a hunch that rates are on an upward trend then you'll
want to consider locking the rate as soon as you are able. Before
you decide to lock, make sure that your loan can close within the
lock in period. It won't do any good to lock your rate if you can't
close during the rate lock period. If you're purchasing a home,
review your contract for the estimated closing date to help you
choose the right rate lock period. If you are refinancing, in most
cases, your loan could close within 30 days. However, if you have
any secondary financing on the home that won't be paid off,
allow some extra time since we'll need to contact that lender to
get their permission.
If you think rates might drop while your loan is being processed,
take a risk and let your rate "float" instead of locking. You can
watch rates and lock in at any time, but at least 5 days prior to
your closing.
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What determines the cost of a mortgage? |
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There are five factors that determine the ultimate cost of a mortgage.
The principal, or amount of the loan, is the total amount you borrow
(the purchase price minus your downpayment).
The interest rate adds significantly to the cost of your mortgage. Fixed
or adjustable, the interest paid at the end of the loan can exceed the
original cost of the home itself. For instance, a $100,000 loan balance
at 8.5% for 30 years will cost you $277,000 by the time the loan is retired.
The term of the loan is the length of time until the loan is paid off.
A longer term means more interest and higher cost.
Points are interest paid on the loan and they're purely optional. You
pay points at closing if you want to reduce the interest rate and make
your monthly payments smaller. One point equals one percent of the loan
amount.
Fees are paid to the lender at closing to cover the costs of preparing
the mortgage. They can vary according to where you live and what type
of loan you're securing.
While points and fees are not financed, they still contribute to the
cost of the mortgage.
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How can a shorter term save me money on a Fixed-Rate Mortgage? |
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By opting for a shorter term, you can save thousands of dollars
in interest - not only because you'll be paying off the loan
sooner, but lenders generally offer better interest rates on
shorter-term loans. And though your payment will be more each
month, it may not be as much as you may think. The grid below
illustrates the savings on a $100,000 loan at 8.5% interest.
| Term |
Monthly Payment |
Total Interest Accrued |
| 30 yr. |
$768.91 |
$176,808.95 |
| 15 yr. |
$984.74 |
$77,253.12 |
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How does an ADJUSTABLE RATE MORTAGE work? |
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Adjustable rate mortgages allow the borrower to make lower
initial payments in comparison to fixed rate mortgages. These
payments increase over time to meet the market rate. An
adjustable rate mortgage works well for younger buyers whose
income will grow or self employed borrowers whose income can
fluctuate. There is a large selection of adjustable loans tailored
for specific needs. You will need to know the start rate, fully
adjusted rate (which is the Index + Margin), and whether the loan
has Negative or No-Negative amortization options. You will also
need to know the Life cap of the loan. Consult your loan advisor
or view the enclosed guide to adjustable rate mortgages.
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How is "Start rate" different from "Qualifying rate"? |
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Start rate determines the initial payment; the qualifying rate is
determined by the programs guidelines and is used to calculate
the borrower's ability to re-pay the loan.
Qualification rate is often the payment for the second year of the
loan or the rate plus 2%. (An adjustable rate loan with a start
rate of 5% will often have a qualification rate of 7%).
A common misconception is that by choosing an adjustable rate
mortgage with a lower initial payment, the borrower can qualify easier.
In reality, the borrower has to qualify for a higher payment.
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How is start rate different from APR? |
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The APR is the rate after taking financial costs of the loan
into consideration. Please see the following for information
regarding APR. APR is a calculation that expresses the total
cost of a mortgage loan as a yearly rate (according to a
federally mandated procedure). The APR calculation takes into
account monthly interest payments, mortgage insurance, points,
and certain fees paid at origination. It generally results in a
rate slightly higher than the stated interest rate on the loan.
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What is an intermediate fixed rate mortgage? |
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An intermediate fixed is a mortgage with a fixed rate for the
first few years, which then becomes either an adjustable or has a
balloon payment. The fixed period is typically 3,5,7,10 years.
These loans are recommended for borrowers who plan to move within
the fixed period or when interest rates are high and you expect them
to come down. Always consult with your loan advisor before recommending
one of these loans and be sure to emphasize what happens to the loan
after the initial fixed period.
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Why offer a balloon loans? |
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Balloon loans generally offer a lower payment for a shorter period
of time. If the borrower is purchasing a property that he knows he
will refinance in 3,5,or 7 years, a balloon loan may be right for
him.
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Why pay points? |
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Points are used to reduce the rate and thereby the payment.
When a borrower pays points on a purchase loan, the borrower
receives tax benefits as well as lower payments over the life
of the loan.
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When do I select a zero point option? |
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When the borrower intends to keep the loan for a very short time
a zero point option may benefit the borrower.
A zero point loan usually has an interest rate of .5% to 1% higher
depending on the borrower's credit and income and the loan he selects.
It is seldom advantageous for a borrower to select a Zero Point loan
on a loan of $150,000 or less.
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