Sunday, July 5, 2015

Large Bank? Mortgage Banker? Mortgage Broker? Direct Lender? Which Offers The Best Rates?

Large Bank? Mortgage Banker? Mortgage Broker? Direct Lender?

Over the past few years I have had many clients whom are shopping for the lowest rates and costs share with me various different stories when speaking with each type of lender.  It is important to mention that the majority loans are sold by ALL lenders on the secondary market (Fannie Mae, Freddie Mac, FHA/HUD, etc.).  Thus, we all offer the same products but just operate in different manners.

One large bank told a client  "We are one of the largest banks in the United States so we have the lowest rates and costs."  Another mortgage banking company said to the client " We are a mortgage banker, we lend our own money so we offer the lowest rates and costs", while another said to a client "We are a direct lender! We offer the best pricing in the market!"

I can make it very, very simple for anyone that is shopping for a mortgage loan.  There are only TWO numbers that matter :  The Net Origination Fee and the Note Rate.

The Net Origination Fee is the cost of the loan from the lender.  It is not the cost for the appraisal, credit report, flood fee, tax service fee, title fees, recording fees or any prepaid cost (interest, home and property tax insurance escrow account set up or home insurance premium).

The second is the Note Rate.  This is the rate that you are paying on a monthly basis (3.75%, 3.875%, etc).

That is it.  Very simple.  When shopping for rates and costs you just need to ask these two questions:  "what is the net origination fee and what is the note rate."

The variance in these two questions by a large bank, mortgage banking company, mortgage broker or direct lender will be dependent on their rate and cost "mark-ups", office overhead expenses, commissions paid to loan officers and profit margins set by each company.

So, to answer the question "Who Offers The Lowest Rates With The Lowest Costs?" It comes down to these "mark-ups" to the rates and costs that each company is willing to offer.

It is best to shop at least a few companies so that you can compare.

I welcome you to visit us at to see how we operate.  We are confident that our business model offers our clients the lowest rate and costs in the industry.

Thank you!  Bob McCormick, President

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