When a potential borrower makes an application for a loan the lender will look at many different factors in order to make a decision to lend or not to lend.
As the bank/lender studies the risk of the loan the underwriting department reviews borrower information and determines if the loan will be made and at what interest rate.
- What is the term for this process?
- Explain the concept of “points” and who charges them, who pays them, and why.
- Define what a point is.