A historical scenario is using the movement and pattern of historical interest rates to show a borrower examples of how an ARM would perform.
While this process can seem mindless to many, a lot of borrowers get a better grasp of how index rate movements impact an adjustable rate mortgage which they are considering signing up for.
Just remember that in terms of interest rates, the past is never a dependable predictor of the future.
Generic prices are prices based on assumptions of the borrower having the most favorable characteristics that command the lowest prices.
When a borrower asks off-hand what are the charges of the lender, without any information and details provided by the borrower, the lender can only provide generic price quotes.
Therefore in order to attract the customer with the lowest price possible, assumptions about the borrower can be made:
One of the biggest myths surrounding the lending industry is that only US citizens would be able to qualify for mortgages to buy their dream homes.
This cannot be further from the truth.
This myth might have originated decades ago when aliens, whether resident or non-resident, found it tough to obtain home loans.
A float refers to the loan status whereby interest rates and points can vary due to changes in market condition between the time of the borrower showing an interest and the time of actual loan application.
This is as opposed to a lock whereby an interest rate is committed by the lender and will not change even if market conditions change.
If there is no mechanism in place to protect lenders from unreasonable borrowers, a borrower can effectively walk into a bank and demand to be offered interest rates that existed a year ago.