Loan Processor Interview Preparation Guide
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Loan Processor Frequently Asked Questions in various Loan Processor job interviews by interviewer. The set of questions are here to ensures that you offer a perfect answer posed to you. So get preparation for your new job interview

103 Loan Processing Questions and Answers:

1 :: Do you know what is ‘Loan grading'?

The classification of loan based on various risks and parameters like repayment risk, borrower's credit history etc. is known as ‘loan grading'. This system places loan on one to six categories, based on the stability and risk associated with the loan.

2 :: Tell me what is ‘Credit Check'?

A credit check or a credit report is done by the bank on a basis of an individual's financial credit. It is done in order to make sure that an individual is capable enough of meeting the financial obligation for its business or any other monetary transaction. The credit check is done keeping few aspects in concern like your liabilities, assets, income etc.

3 :: Tell us what is your greatest weakness and what are you doing to improve it?

Speaking my mind. I am reserved and tactful, and sometimes withhold my opinion when it may be used to serve a purpose. Speak to a situation, not an individual. When speaking to a scenario, one can tactfully express opinion.

4 :: Explain what is cashier's cheque?

A cashier cheque issued by the bank on behalf of the customer and takes the guarantee for the payment. The payment is done from the bank's own funds and signed by the cashier. The cashier cheque is issued when rapid settlement is necessary.

5 :: Tell me how to analyze credit?

A processor should have the ability to analyze a credit report regardless of what credit bureau or repository provided it. In addition to understanding the content of the report, the processor should know what documentation is required to address that credit profile.

6 :: Tell me what is the ‘cost of debt'?

When any company borrows funds, from a financial institution (bank) or other resources the interest paid on that amount is known as ‘cost of debt'.

7 :: Tell me what do you mean by term ‘Usury'?

When a loan is charged with high interest rate illegally then it is referred as ‘Usury'. Usury rates are generally set by State Law.

8 :: Tell me what is the card based payments?

There are two types of card payments

a) Credit Card
b) Debit Card

9 :: Explain me what do you mean by term ‘Loan Maturity' and ‘Yield'?

The date on which the principal amount of a loan becomes due and payable is known as ‘Loan Maturity'. Yield is commonly referred as the dividend, interest or return the investor receives from a security like stock or bond, interest on fix deposit etc. For example, any investment for $10,000 at interest rate of 4.25%, will give you a yield of $425.

10 :: Explain what is ‘balloon payment'?

The ‘balloon payment' is the final lump sum payment that is due. When the entire loan payment is not amortized over the life of the loan, the remaining balance is due as the final repayment to the lender. Balloon payment can occur within an adjustable rate or fixed rate mortgage.

11 :: Tell me how confident are you with reviewing pay stubs to calculate income accurately? Walk me through your calculations?

Confident. I can see where deductions and percentages are deducted from annual income before tax and medical.

12 :: Do you know how to analyze a loan file?

Knowing the elements that make or break a deal is essential. It is critical that a processor has the ability to take a look at a loan application with its supporting documentation and quickly determine the likelihood of that file closing. If challenges are identified, the processor should have some idea of what has to happen (and in what time frame) for the loan to be approved.

13 :: Tell me what is ‘prime rate'?

Basically, ‘prime rate' is the rate of interest that is decided by nations (U.S.A) largest banks for their preferred customers, having a good credit score. Much ‘variable' interest depends on the ‘prime rates'. For example, the ‘APR' (Annual Percentage Rate) on a credit card is 10% plus prime rate, and if the prime rate is 3%, the current ‘APR' on that credit card would be 13%.

14 :: Tell me what is (APR) Annual Percentage Rate?

APR stands for Annual Percentage Rate, and it is a charge or interest that the bank imposes on their customers for using their services like loans, credit cards, mortgage loan etc. The interest rate or fees imposed is calculated annually.

15 :: Do you know what is Charge-off?

Charge off is a declaration by a lender to a borrower for non-payment of the remaining amount, when borrower badly falls into debt. The unpaid amount is settled as a bad debt.

16 :: Tell us how reliable of a worker are you?

I am extremely reliable. I have never really called in, and whenever extra help is needed I am usually the first person to volunteer to help.

17 :: Tell me how to shop a loan?

Long gone are the days of shipping a loan to a lender just to find out that it won't fly as submitted. Take advantage of the lender's quick qualification and automated underwriting system to close more loans. Underwriting guidelines, program matrixes, rate sheets, and more may be available on the lender's website.

18 :: Do you know what is ‘Bill Purchase'?

In ‘Bill Purchase' the loan will be created for the full value of the draft and the interest will be recovered when the actual payment comes. For example, a ‘Sight draft' is presented for which the loan is created for 100% of the draft value. The money is received after 7 days, and then the interest will be recovered for 7 days along with the principal amount.

19 :: Explain about your education/training?

My work history is of 26 years provided me training and education which I apply everyday. I keep myself informed by enrolling into different web sites to keep myself informed of changes that may effect my role as Mortgage Loan Processor.

20 :: Tell me what do you mean by ‘cheque endorsing'?

‘Endorsing cheque' ensures that the cheque get deposited into your account only. It minimizes the risk of theft. Normally, in endorsing cheque, the cashier will ask you to sign at the back of the cheque. The signature should match the payee.