Banker vs Wholesale Lender



Most potential homeowners are unaware that they currently, have 3 options when it comes to getting a home loan.

While it might not be blatantly obvious to those outside of the mortgage industry, those that work within the industry share a common secret:  Wholesale lending will typically give the person looking for a home loan the best rates.  To the contrary, both correspondent and retail lending situations provide the most profit to the bankers.

Many homeowners make the mistake of turning to banks or using the in-house lender of their real estate agent, when it comes time to get a mortgage. For many, they are the most obvious choice, mainly because home loan services are usually offered at the customer’s primary banking institution or their agent tells them to use a certain in-house mortgage person.  But, that does not mean it is the best option for the client.  Pricing with many mortgage brokers can be just as competitive as a bank and most of the times better.

Wholesale rates, offered by wholesale mortgage brokers, can be substantially lower than retail interest rates you’ll get with banks, in-house mortgage lenders, mortgage bankers / direct lenders and the ONLY WAY you can access wholesale rates is through a wholesale mortgage lender. For examples, see below.



Examples – Wells Fargo, CHASE, B of A, Navy Federal Credit Union, US Bank, Union Bank, Everbank, Citibank, Comerica Bank, USE Credit Union, HomeStreet Bank.

There are banks that work directly with homeowners to provide financing on the retail level with retail rates.  Almost all have retail branches and offices with excessive overhead. One of the big misconceptions out there is that big banks are easier to deal with. That is not true; the bigger the bank is, the more bureaucracy you will have to deal with. That actually makes it harder for you to get a loan. Just because you bank there, DO NOT think they are giving you a good deal (especially Navy Fed, please call Derek if you bank with or are pre-approved with Navy Fed on a VA loan). These lenders also do not have to disclose their commission to you, so you do not know how much they are actually making on your loan OR how much is available to you on the back end for lender credit.



Examples – Movement Mortgage, iMortgage,  CMG Financial, Guaranteed Rate, Amerifirst Financial, Point Mortgage, Prime Lending, New American Funding, Greenpath Funding, Guild Mortgage, Skyline Home Loans, San Diego Funding, Home Services Lending, Drop Mortgage, Cross Country Mortgage, Benchmark Mortgage, Caliber Home loans retail, Synergy One Lending, Veterans United, Cornerstone Mortgage, Freedom Mortgage retail, JMJ Financial, First Choice loan services, HomeBridge Financial etc.

These are mortgage bankers / direct lenders that work with homeowners to provide financing on the correspondent level. These lenders have branch offices (massive overhead to pay for) and offer their own retail/correspondent mortgage rates, mainly by using their own warehouse line of funding. They make a big deal of having this “in-house” capability to you, the client, and saying that they are able to maintain control of the loan and that’s a big plus.  But, Derek can tell you from experience, it’s not a big deal AT ALL and more often than not, they don’t have this “in-house”.  They might just have it at the corporate office or somewhere else and so they are saying it is “in-house” to you.  Also, they have more strict underwriting guidelines and A LOT less options than wholesale lenders do.

These are also the in-house lenders at most real estate companies.  Anyone who says they are a direct lender or mortgage banker typically fall into this category.  They do not have to disclose their commission, so you do not know if you are getting the best deal.  Also, did you know that the real estate office gets money when you use their in-house lender, even though it is a completely different company?  If your Realtor is directing you towards the in-house lender, be careful and talk to me and let’s compare rates and programs (but some Realtor’s don’t even know all of this, so they may not be to blame).

When Derek found out how much money is actually made on a loan on the retail and correspondent sides, it became very clear to him that you, the client, is losing.  That’s why their rates are higher, more money is made and more money is paid out per closed file to many different people.  At one correspondent lender Derek worked at in the past, he counted 9 different people getting paid when he closed a loan.  That is just crazy.

*If you are working with someone or are referred to someone, ask them if they are a direct lender and see what they say.


WHOLESALE MORTGAGE BROKERS – click here to learn how to get money for closing costs

Then there are wholesale mortgage brokers who work as middlemen between the banks / investors and borrowers on the wholesale level to secure financing for homeowners.  That’s us. California’s largest wholesale mortgage broker.  With us, you have access to over 85 different lenders / investors which we shop for you. Let us find the best rate / loan combination for you and your particular situation, so you don’t have to spend all your time calling around trying to get “real” quotes from different banks.  This is why people refer to Derek as “The Human Lending Tree”.

We also have access to the wholesale side of many of the above mentioned retail lenders and mortgage bankers (which means lower rates with us).  Many of these smaller investors sell pools of mortgage loans to the big retail banks mentioned above. For example, some of our investors sell loans directly to Wells Fargo. So, you are essentially getting a Wells Fargo loan on the wholesale side (Wells Fargo no longer does wholesale lending to wholesale brokers directly).  The same can be said for the other major FDIC banks mentioned above. It goes back to retail versus wholesale.  Also, as wholesale lenders, we DO have to disclose our commission to you and we can also show you the commission your bank would make on your loan if you went with them.  

We are also able, many times, to provide you with MASSIVE lender credits towards closing costs for many loan programs, unlike banks and mortgage bankers / direct lenders.  

For example, in April 2017, Derek gave a client back over $12,400 to cover all closing costs for a client’s VA loan purchase and his rate was still lower than the mortgage person the client has first talked to.  You WILL NOT get that working with a bank or mortgage banker / direct lender.

Now, not all mortgage brokers are created equal, either.  Most mortgage brokers are small mom & pop shops who only do a couple loans a month… so they have to make more money on each deal.  Because we do so many loans, we don’t make as much per deal and make it up on volume and referrals.  So, just as with the previous examples, if you are working with a mortgage broker currently or have been referred to one, get a quote, but then have Derek give you a quote to see how it compares.





In conclusion, we hope that after reading this you now understand the differences and the options you have in mortgage lenders.  Derek and his team would love the chance to earn your business on your next home loan.   See below for a sample of some of the banks / investors that we shop your loan at to find you the best rate / scenario for your situation.  This is why Derek is “Your Personal Mortgage Shopper”.

Please let us know how we can help you.

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