The Rate Sheet -Loan Officer Training

One of a loan officer's most important tasks is to provide interest rate information to potential borrowers and real estate agents. Though before a loan officer attempts to provide any rate information, they will need to have a firm grasp of how interest rates are quoted.

Rates are quoted in fractions, so they will need to be converted from decimal format.

Fraction to Decimal Values:

If a loan officer works for a Mortgage Broker the rate sheet they receive from lenders will resemble the first table. And if they work for a Mortgage Banker their rate sheet will look like the second format. The prices on both sheets are the same, they are just expressed differently.

Broker Rate Sheet

Banker Rate Sheet

Par, Above Par and Below Par Pricing

The interest rates from 6.5% to 6% on the above charts are considered above par pricing or overage (par being neither a cost nor a rebate). This basically means that a rebate is given, by the lender, when a borrower locks in at any rate above and including 6%. So for a 30 day lock at 6.375 the loan officer would receive a rebate of 1.5% of the loan amount. If the loan amount were $250,000 the rebate would be $3,750.

Whether this rebate is applied to the borrowers’ closing costs or is retained as a commission is up to the loan officer.

Unless employed for a mortgage bank, loan officers will need to disclose this fee on the good faith estimate as either a commission or a rebate applied to the borrowers’ closing cost. And likewise, if a loan officer decides to retain this rebate as a commission the borrower may decide to keep the loan officer or shop around for more competitive rates.

Rates from 5.875 to 5.625 on the above chart are referred to as below par pricing, discount points and wholesale pricing. In order to obtain these rates, a borrower will need to pay the difference for anything under par.

Adjustments

Also, adjustments will need to be made for issues such as loan-to-value, down payment and FICO scores. For example, the borrower's interest rate may be adjusted 1% higher for a condominium or .5% for not meeting minimum credit scores. It is because of these adjustments that a loan officer will need to ask detailed questions during the prequalification or any general interest rate inquiries.