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Underage
When a mortgage is sold at a price lower than the posted price, it is described as an underage.
Lenders provide loan officers and brokers with updates on their par rates regularly.
This is the lowest rate at which a loan can go without incurring a loss. The posted price usually consist of a slight premium to the par rate.
However, sometimes loan officers choose to sell loans below the posted price in order to close a sale.
For example, a posted price might be 5% with 1 point. But a loan of 5.5% with 0.5 point was sold.
Even though this might result in extra interest that a borrower has to pay, it is technically still an underage which will affect the performance metrics of the loan officer.
Moreover, points are revenue generators for a broker while profits on interest are not pocket by them at all.
This is why underages are uncommon and you would be one really lucky fellow to secure an underage loan.
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