“Mortgage Banker related Frequently Asked Questions in various Mortgage Banker job interviews by interviewer. The set of questions here ensures that you offer a perfect answer posed to you. So get preparation for your new job hunting”
Commercial bank is owned by the group of individuals or by a member of Federal Reserve System. The commercial bank offer services to individuals, they are primarily concerned with receiving deposits and lending to business. Such bank earns money by imposing interest on the loan borrowed by the borrower. The money that is deposited by the customer will be used by the bank to give business loan, auto loan, mortgages and home repair loans.
There are two different types of 'Fixed Deposits'
Special Term Deposits: In this type of 'Fixed Deposits', the earned interest on the deposit is added to the principal amount and compounded quarterly. This amount is accumulated and repaid with the principal amount on maturity of the deposit.
Ordinary Term Deposits: In this type of 'Fixed Deposits', the earned credit is credited to the investor's account, once in a quarter. In some cases, interest may be credited on a monthly basis.
The earned interest on fixed deposits is non-taxable. You can also take a loan against your fixed deposit.
a) Retail or consumer banking:
It is a small to mid-sized branch that directly deals with consumer's transaction rather than corporate or other banks
b) Corporate or business banking:
Corporate banking deals with cash management, underwriting, financing and issuing of stocks and bonds
c) Securities and Investment banking:
Investment banking manages portfolios of financial assets, commodity and currency, fixed income, corporate finance, corporate advisory services for mergers and acquisitions, debt and equity writing etc.
d) Non-traditional options:
There are many non-bank entities that offer financial services like that of the bank. The entities include credit card companies, credit card report agencies and credit card issuers
You can operate your bank accounts in different ways like
a) Internet banking
b) Telephone or Mobile banking
c) Branch or Over the counter service
d) ATM ( Automated Teller Machine)
There are many types of banking software applications and few are listed below
a) Internet banking system:
Internet banking allows the customers and financial institution to conduct final transaction using banks or financial institute website.
b) ATM banking (Automated Teller Machine):
It is an electronic banking outlet, which allows customers to complete basic transaction.
c) Core banking system:
Core banking is a service provided by a networked bank branches. With this, customer can withdraw money from any branch.
d) Loan management system:
The database collects all the information and keeps the track about the customers who borrows the money.
e) Credit management system:
Credit management system is a system for handling credit accounts, assessing risks and determining how much credit to offer to the customer.
f) Investment management system:
It is a process of managing money, including investments, banking, budgeting and taxes.
g) Stock market management system:
The stock market management is a system that manages financial portfolio like securities and bonds.
h) Financial management system:
Financial management system is used to govern and keep a record of its income, expense and assets and to keep the accountability of its profit.
The bank earns profit in various ways
a) Banking value chain
b) Accepting deposit
c) Providing funds to borrowers on interest
d) Interest spread
e) Additional charges on services like checking account maintenance, online bill payment, ATM transaction
Before opening a bank account, if it is a saving account, you have to check the interest rate on the deposit and whether the interest rate remains consistent for the period. If you have the checking account, then look for how many cheques are free to use. Some banks may charge you for using paper cheques or ordering new cheque books. Also, check for different debit card option that is provided on opening an account and online banking features.
In such account you have to deposit your money for the fixed period of time (5-7 years), and you will earn the interest on it. The rate of interest is decided by the bank, and you cannot withdraw the funds until the fixed period expires.
The different types of loans offered by banks are:
a) Unsecured Personal Loan
b) Secured Personal Loan
c) Auto Loans
d) Mortgage Loans
e) Small business Loans
Both are used for the transfer of the amount between two accounts of same banks or different bank. 'Cheque' is issued by an individual who holds the account in a bank, while 'Demand draft' is issued by the bank on request, and will charge you for the service. Also, demand draft cannot be cancelled, while cheques can be cancelled once issued.
It is a letter of credit or a contractual agreement between financial institute (Bank) and the party to which the letter is handed. The ILOC letter cannot be cancelled under any circumstance and, guarantees the payment to the party. It requires the bank to pay against the drafts meeting all the terms of ILOC. It is valid upto the stated period of time. For example, if a small business wanted to contract with an overseas supplier for a specified item they would come to an agreement on the terms of the sale like quality standards and pricing, and ask their respective banks to open a letter of credit for the transaction. The buyer's bank would forward the letter of credit to the seller's bank, where the payment terms would be finalized and the shipment would be made.
Availability Float is a time difference between deposits made, and the funds are actually available in the account. It is time to process a physical cheque into your account.
For example, you have $20,000 already in your account and a cheque of another $10,000 dollar is deposited in your account but your account will show balance of $20,000 instead of $30,000 till your $10,000 dollar cheque is cleared this processing time is known as availability float.
Start-Up Loans:
This type of Loan is offered to borrower to start their business and can be used to build a storefront, to acquire inventory or pay franchise fees to get a business rolling.
Line of Credit:
Lines of credit are another type of business loan provided by commercial banks. It is more like a security for your business; the bank allows the customer to withdraw the amount from readily available funds in an adverse time. Customer or Company can pay back over time and withdraw money again without going into the loan process.
Small Business Administration Loans:
It is a Federal Agency (U.S) that gives funding to small businesses and entrepreneurs. SBA (Small Business Administration) loans are made through banks, credit unions and other lenders who partners with SBA.
Ethics are becoming more important to banks. Ever since Sergio Ermotti admitted that some crazy people might have squeezed through the recruitment net at UBS, banks have been doing their utmost to weed out sociopaths and rampant narcissists.
The emphasis on ethics is manifesting itself in interview questions relating to values. "We use scenarios to ascertain how people will react in particular situations and to see how they fit with our culture and values," says the head of recruitment at one American bank in London, who declined to speak on the record. "We're very collaborative and we want to see that people's values match our own."
A senior recruiter at a British bank confirmed the importance of values-based questions during the contemporary banking interview. She says the ideal response is one which a) shows an appreciation of the bank's values and b) uses an example from the interviewee's own working life to demonstrate those values in action. "You need to answer these questions using real examples that reflect the bank's own values. If you don't, you'll be in trouble," she says.
Line of credit is an agreement or arrangement between the bank and a borrower, to provide a certain amount of loans on borrower's demand. The borrower can withdraw the amount at any moment of time and pay the interest only on the amount withdrawn. For example, if you have $5000 line of credit, you can withdraw the full amount or any amount less than $5000 (say $2000) and only pay the interest for the amount withdrawn (in this case $2000).
Foreign draft is an alternative to foreign currency; it is generally used to send money to a foreign country. It can be purchased from the commercial banks, and they will charge according to their banks rules and norms. People opt for 'foreign draft' for sending money as this method of sending money is cheaper and safer. It also enables receiver to access the funds quicker than a cheque or cash transfer.
Yes, bank will charge on 'overdraft protection' services but the charges will be applicable only when you start using the service.
Cheque discounting service is offered only by few banks. For instance, if you have a cheque of $3000 outstation and the cheque will take 7 seven days for clearance, then bank will offer you a service for early payment. The bank can make an early payment, but they will pay only for certain percentage of the actual amount, here they will pay you $2000 but they will charge interest on it and the remaining $1000 will be paid, once the outstation cheques get clear.
There is not much difference between bank guarantee and letter of credit as they both take the liability of payment. A bank guarantee contains more risk for a bank than a letter of credit as it is protecting both parties the purchaser and seller.
I would say just be prepared to work in a fast-paced environment, and working over the phone. They do have full-time and part-time shifts, so it just all depends on how long you feel like you can sit there and talk to people. They teach you a lot, so you don't really have to go in knowing everything about credit cards. That's pretty much it. It's a professional environment, but you don't have to dress up every day. You can come in wearing what you want to wear.
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