TIP – Be VERY careful when looking at mortgage rates online. Here is an example. If you go to the Navy Federal Credit Union website, their 30 year fixed rate loan is quoted with a 1% origination charge and ALSO a discount points charge. That means you get charged twice. Isn’t that nice of them? Another example. Quicken quotes rates online, but when you read the fine print, you will see many times that it requires A LOT of money upfront, in the form of origination points, to get that rate. Let us shop it for you on the wholesale side at Quicken. We do this every day and we know what the outcome will be (better for you by far).
TIP – Your bank will try to tell you that qualifying with them will be easier because they already have your information. This is a joke. Would you take a higher interest rate for 30 years because of them having information about you that would take us 5 minutes to get from you? Probably not!
TIP – When getting a mortgage loan quote and comparing lenders, make sure you get and compare the quotes on the same day and even within the same hour. Mortgage rates change EVERY DAY and sometimes during the day. So to compare apples to apples, make sure you compare rates on the same day.
TIP – Cons of working with a retail Bank or Mortgage Banker / Direct Lender
- Conservative loan programs
- Lengthy process, VERY bureaucratic (banks)
- Do NOT have to disclose the yield-spread premium
- Can overcharge you (commission does not have to be disclosed)
- Incompetence (many banks hire kids straight out of college and put them on a salary to do home loans, so really they are just order takers)
TIP – Pros of working with a Wholesale Mortgage Lender
- They do all the legwork for you, working on your behalf with the lender
- They compare wholesale mortgage rates for you, from a large number of banks and investors all at once
- Wholesale interest rates can be lower than retail (bank / direct lender) interest rates
- Looser underwriting guidelines
- You will get more loan options because they work with numerous banks and investors
- Brokers can finance tricky deals because of their knowledge and access to various niche banks / investors
- Are typically easier to get in contact with, less bureaucratic
- They are commission only employees so they will work a lot harder for you than a retail bank loan officer who gets a salary even if your loan does not close
- Typically have much more experience than retail loan officers
TIP – You do need to be careful when shopping with a wholesale mortgage lender / broker. You will get quoted different rates with different brokers. Some mortgage brokers that only do a deal or two a month need to make more per loan to pay their bills. That’s why you need a broker who has a steady pipeline of files and referrals so that they have a lower margin of profit per loan, which means cheaper rates and closing costs for you.
