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xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxUnderstanding the Many Advantages of a "Wholesale Mortgage"
The biggest advantage is that Banks, Wholesale Lenders and Direct Lenders Offer "Mortgage Brokers" better Interest rates on Mortgage Loan Products through their "Wholesale Outlets" In other words, the interest rate you see posted at your Bank, We can get that same Loan for you, but at a .25-.5% Better Interest Rate than you can! Mortgage Loans are both a Product and a Service offered as a package to Consumers. There is usually a profit made by the Mortgage Broker on the Mortgage Loan Product Itself, in the form of "Mark-Up" Incentives (YSP's and Rebates Explained Below) offered from the Banks or Lenders. In addition, Brokers / Banks or Lenders charge an "Origination Fee" for the many services they provide the client over a typical 2-4 week period. Some Lenders will Offer a "No Fee Loan" at a slightly higher interest rate that ofsets these operational costs. This is how an actual "Wholesale Broker" Differs, WE DO NOT MAKE A PROFIT ON THE MORTGAGE PRODUCT We pass the Mortgage Loan on to you, in it's "Wholesale State" just as we obtained it from the Wholesale Lender or Bank. This is how you can get the Best Mortgage Possible, at the Lowest Rates!
Your going to pay an Origination fee (Or "Points" at Retail Banks) anyway, weather you go Wholesale or Retail, you'll be paying somebody or some Company (Bank Lender or Broker) an Origination Fee for their weeks of service to you. Don't be fooled by those "No Fee" Offers, or those guys that throw in some little "Appraisal or Credit Report Freebies" we all know how that works, I hope? Here is the Definition of a Wholesale VS. Retail Broker Wholesale Broker / Wholesale Mortgage:A Loan obtained for a Consumer, through their Mortgage Broker, from a Wholesale Lender or Bank. If the interest rate is "Un-Altered" or not "Marked Up" by the Broker, with no expectation for a Rebate or Yield Spread Premium (YSP) from that Wholesale Lender or Bank. In other words, if the interest rate is remains "Un-Altered", then the loan is still considered "Wholesale" Brokers originating Wholesale Mortgages are considered "Wholesale Brokers"Retail Brokers / Retail Mortgage:To Consumers, most Brokers are considered “Retail Brokers” because they are allowed to "Mark-Up" the interest rate on loans they originate, in exchange for a Profit Percentage ( normally 1 - 2.5% of the loan amount ) paid Up-Front, by the Wholesale Lender or Bank, to the Broker, in the form of Yield Spread Premiums (YSP) or Rebates. Like any Wholesale Product, once you add on a Retail Mark-Up, that product is no longer "Wholesale"YSP / Rebates / “Retail Mortgage Brokers"A guarded secret amongst "Retail Mortgage Brokers"The practice of "Adjusting" or “Marking Up” the interest rate on the mortgage loans that Brokers obtain from Wholesale Lenders or Banks in exchange for YSP's and Rebates. This Interest Rate Mark-Up effectively raises the Borrowers monthly mortgage payments for the durration or term of the loan. This is how Wholesale Lenders and Banks manage or offset these Up-Front YSP and Rebate Pay-Outs, to the Broker.This situation is where the term "Predatory Lending" originated. Most Borrowers just assume that they will get the best interest rate possible, based on their qualifications. This is sadly, "Not Always True"If you like this information, you may also like these pages...
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