Mortgage rates

Lenders quoting you rates

Before a lender or mortgage broker quotes you an interest rate, the loan officer will add on how much their branch wants to earn. The branch or company typically sets a policy on how little those earnings can be (the minimum amount a loan officer can add on to his or her cost), but does not want to overcharge borrowers either. So they usually set a maximum the loan officer can charge, between that minimum and maximum, a loan officer has a great deal of flexibility.

For instance, say a loan officer decides she and her branch are going to earn one point on the loan. When you call and ask for a rate quote, she will add one point to the cost of the loan and quote you that rate. According to the rate sheet above, six percent will cost you zero points. Five and three-quarters percent will cost you one point.

In the example above, at 7.00%, the loan officer and branch would earn one point and have some money left over. This could be used to pay some of the fees (documents, processing, overnight fees, etc), which is how they show a “no fees, no points” mortgage. In essence, you simply pay a higher interest rate for the loan. 

Always shop around for and compare lenders and their rates, programs, fees, and overall interest rates before choosing a lender!   

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