The correct answer emphasizes the necessity of communicating when the prevailing rate would be established after revealing the rate methodology to the borrower. This is crucial because it helps the borrower understand the timeline and process for determining their mortgage rate. By setting clear expectations regarding when they can expect to see the applicable prevailing rates, lenders facilitate transparency and assist borrowers in making informed decisions. This promotes a more trusting relationship between the lender and the borrower, as it clarifies any uncertainties about the timing of their mortgage rate offers and the factors influencing them.
Offering a warning about potential closing fees, suggesting negotiation for lower rates, or inviting applications for multiple loans, while potentially useful to consumers, do not directly follow the requirement tied to disclosing rate methodology. They may not align with the immediate procedural disclosure that is mandated following the explanation of how rates are determined. The focus is specifically on informing the borrower about the timing associated with rate setting, which is foundational knowledge for their next steps in the mortgage process.