Mortgage Lenders Can Help
If you get a loan officer, you should know that prior to quoting an interest rate, the loan officer will add on how much he and his branch want to earn.
The branch or company sets a policy on how little that can be but does not want to overcharge borrowers either. Between that minimum and maximum, the loan officer has a great deal of flexibility. For instance, if the loan officer decides he and his branch are going to earn one point. When you call and ask for a rate quote, he will add one point to the cost of the loan and quote you that rate.
It is also helpful to know that the two main kinds of loans are fixed rate mortgage and adjustable rate mortgage. In many countries, floating rate mortgages are the norm and will simply be referred to as mortgages.
Combinations of fixed and floating rate are also common, whereby a mortgage loan will have a fixed rate for some period, and vary after the end of that period. In the U.S., the term is usually up to thirty years, although longer terms may be offered in certain circumstances.
Adjustable rates transfer part of the interest rate risk from the lender to the borrower, and thus are widely used where fixed rate funding is difficult to obtain or prohibitively expensive.
Since the risk is transferred to the borrower, the initial interest rate may be from 0.5% to 2% lower than the average 30-year fixed rate; the size of the price differential will be related to debt market conditions, including the yield curve.
Numbers in parentheses indicate premium pricing, meaning that instead of having a cost; money is actually paid back to the loan officer and the branch for originating a loan at that rate. The amount earned by the loan officer and the branch is subject to a split, just like real estate agents.
Keep in mind that some of it goes to the loan officer and part goes to the branch. Any fees that are not part of the points go to the branch and are not subject to the split. Every morning a loan officer gets a rate sheet. Mortgage bankers get the rate sheet from their company.
Mortgage brokers get rate sheets from a number of wholesale lenders.
Additionally, there have been times when rate sheets were revised more than five times in one day. These rate sheets are not designed for public view. They are for loan officers' eyes only because they represent the cost of a loan to the loan officer.