Mortgage Rates and Prices

Posted by  on May 18, 2010
If you are interested in California, Oregon, or Delaware mortgage, it is important to be familiar with the different types of mortgages. It is also good to understand the different types of mortgage rates. To start, remember that different rates have different costs. For instance, higher rates do not cost as much as lower rates. This is because the lender is going to earn more in interest over the life of the loan, so it makes sense to charge. There will be a higher charge for a lower interest rate as well because the lender will earn less interest over the long term.

Keep in mind that prospective borrowers ask when they call up a mortgage lender shopping for rates. There is a choice of rates and the rates are very similar from one lender to the next. 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.

A portion 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 - or a number of them. Mortgage bankers get the rate sheet from their company. Mortgage brokers get rate sheets from a number of wholesale lenders.

On volatile days, there may be revisions to the rate sheets. 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, not the cost to the borrower.

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.


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