Mortgage rate sheets are confusing. There is not just a rate that can be quoted due to pricing adjustments, so get familiarized with where the rates are, and where the price adjustments are. Understand that rate sheets change daily, and sometimes more than once.
Get a current rate sheet from your preferred lender. Select what type of loan you need, and find that section (conventional, government, jumbo). Consider you will probably need pricing for 45 days, and follow the column for what is offered for 45 days. You can select 15- or 30-day pricing, but if you are just beginning the loan process, choose the longer time, especially if you want to lock in the rate.
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Look at the schedule of price adjustments in a box of sections usually underneath the menu of rates and pricing. You have to know credit scores, loan-to-value percentage, if the property is owner occupied, if the property is two to four units or just one, if this a "cash out" refinance. There are other pricing adjustments as well. Take your calculator and total up all the adjustments.
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See the current rates for selected program, and notice that there is bracketed pricing shown in parts of 1%, then there is pricing without the brackets. The bracketed pricing will be a higher rate, and the bracketed amount is calculated as a negative amount. If it shows the rate at 5.5% (.875), this means there is a premium known as YSP (yield spread premium) being paid of the loan amount X .875 for taking this rate. The YSP funds can be used in a number of ways, including a way to soak up your pricing adjustments. If the rate shows 5.25% at 0, this means there is no premium being paid, and there is no point cost to the borrower. If the rate shows 5% at .875, this means it will cost the borrower the loan amount X .875 as a point cost for buying down the rate.
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Go back to the 45-day pricing for the program you want. The total of price adjustments will be expressed as a negative, so look for bracketed pricing in the 45-day column. Find the rate that corresponds with your total of adjustments (example: 5.75 at 1.50), if this is close to your total of price adjustments, then this would be your rate.
Tips & Warnings
Rate sheets are confusing, and it is easy to make mistakes by missing a price adjustment. Have the lender rep walk you though this.
