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.

  1. What is the term for this process?
  2. Explain the concept of “points” and who charges them, who pays them, and why.
  3. Define what a point is.


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