How to Understand the Mortgage Rate Sheets
Understanding a mortgage rate sheet can seem like a difficult and overwhelming process. Begin to understand different terms used in the mortgage industry. Proceed by learning what the lenders list on the rate sheets. Follow by putting the information together by using these simple steps with this sample from a wholesale rate sheet.
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Instructions
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Locating the Rate
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Review sample. Follow the steps below while reviewing the sample, to have an understanding of mortgage rate sheets.
Conforming Fixed 30-year
Rate 12-Day 30- Day 60-Day
4.625 0.947 1.135 1.510
4.750 0.239 0.427 0.802
4.875 (0.388) (0.200) 0.175
5.000 (0.749) (0.561) (0.186) -
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Locate the loan program. Find the loan program listed, for example the Conforming Fixed 30-year. Generally several loan programs are listed on the rate sheet. Beneath the loan program are several columns of lock-in periods and several rows of interest rates.
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Locate the lock-in Period. It's listed on top of each column and is the length that the specific interest rate is guaranteed to the borrower. Examples include 12-day, 30-day, and 60-day.
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Locate the rate. Each row of interest rates lists the rate with or without points and the lock-in period. Locate the initial interest rate. The next column to the right lists a positive or negative number.
Locating the Cost of the Rate
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Locate the discount points. The positive numbers listed beneath the lock days and to the right are of the interest rate are discount points. Each point is equal to 1% of your loan amount. Borrowers choose to pay points to lower their mortgage interest rate. For example, for the borrower to receive a rate of 4.625% on a $150,000 loan amount with a 30-day rate lock, he would need to pay $1,702.50, 1.135% of his loan amount.
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Locate the YSP. This is an abbreviation for yield spread premium. A yield spread premium is another term for points as well. The points in parenthesis mean that the mortgage broker is receiving this amount from the lender. If the mortgage broker gives the borrower an interest rate of 5.000% with a 30-day lock on a $150,000 loan amount, he would be receiving $841.50 commission from the lender, 0.561 points.
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Choose the final rate. If the mortgage broker does receive any commission from the lender, he would try and get as close to par rate as possible. Par rate means there are no points added to the rate on either side. In this case, the best deal for the borrower would be accepting the 4.75% paying 0.239 points. Alternatively, the borrower may choose to float the interest rate. Floating allows the interest rate to fluctuate daily, if not several times during the day with market changes.
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