LO room 2
Pricing and structure without confusing the borrower
Pricing is not just rate. It is a structure made from credit, LTV, occupancy, property type, product, points, credits, lock time, and execution. The borrower needs the clean version of that logic.
Operating checklist
What this room helps you do.
- Compare rate, APR, points, credits, and cash to close together
- Explain why the same FICO score can price differently
- Show the cost of changing LTV, product, or lock strategy
- Avoid rate-only comparisons that hide assumptions
Professional-use note
Use this as educational and communication support. Investor guidelines, lender overlays, lock policy, compliance review, and state-specific rules still control the file.
Related Professional topics
Open the scenario library.
Lender pricing realityWhat is an LLPA, and why did my rate get worse without my credit changing?LLPA stands for Loan-Level Price Adjustment. It is a price hit (or credit) Fannie Mae and Freddie Mac add based on your file's risk grid. Your rate looks worse because the grid found a combi
Lender pricing realityWhy do two lenders quote me very different rates on the exact same file?Three honest reasons: their margin (the profit they need that day), the investor they sell the loan to (different overlays and price grids), and the specials a lender is running on a product
Lender pricing realityWhat is the cleanest way to read a rate sheet and quote a borrower without burning trust?Pick the base rate at par on the right product, add every LLPA that applies, then convert to either rate or cost. Quote the borrower one number on one product first, with the assumptions wri
Lender pricing realityWhy is the rate on my investment property so much higher than my primary?Investment property carries some of the largest LLPAs in the entire grid - often 2 to 5 points in cost depending on LTV. The agencies treat it as higher default risk because borrowers protec
Lender pricing realityWhy does pulling cash out raise my rate even with great credit?Cash-out refinances carry their own LLPA stack on top of credit and LTV. The agencies price cash-out as higher risk because the loan balance grew and the equity cushion shrank.
Lender pricing realityWhy does my pricing get worse just because my DTI crosses 40 percent?Fannie Mae has had a pricing adjustment for higher DTI files for years. Cross 40% DTI on a conventional loan and the LLPA grid usually adds an adjustment. Cross again into 45%-plus territory
Lender pricing realityWhen should I move a borrower from conventional to FHA, or to a non-QM product?Pivot when the LLPA stack on conventional makes the rate or down payment painful, when DTI is borderline, or when the property type or income story does not fit clean agency boxes. The goal
Lender pricing realityShould I take a 2-1 buydown, pay points to permanently lower the rate, or neither?A temporary buydown (like 2-1 or 3-2-1) is best when you expect rates to fall and plan to refinance, or when the seller is paying for it. A permanent buydown (paying points) is best when you
Lender pricing realityShould I take the lender credit and a higher rate, or the lower rate with closing costs out of pocket?Take the credit and the higher rate when you are short on cash, when you might refinance soon, or when the break-even is too far out. Take the lower rate when you have the cash and plan to k
Lender pricing realityIf rates drop after I lock, can I get my rate lowered?Sometimes - through a float-down option (paid up front) or by renegotiating the lock with your lender if rates have moved enough to matter. Most lenders will not just give you the lower rate
Use in workflow
Turn the room into a borrower-safe follow-up.
After triage, summarize the issue, the constraint, the document needed, and the next decision point.