Save thousands in fees by going to the source.
Congratulations – you’ve decided to purchase a property. And now, you need a mortgage. Without doing much research you can probably name a few places you could head to check out rates. You might walk into your local bank branch, call a mortgage broker you found on Google, or contact a mortgage lending company you’ve seen commercials on TV for. Three destinations, but in essence, they all are the same: they represent the retail side of the mortgage lending industry. HomeJab offers something different…modern mortgage lending for the tech-savy borrower.
Retail vs. Wholesale
Retail for mortgages is similar to retail for nearly any other product on the market. When you walk into Best Buy, for example, you are paying retail rates for electronics. Best Buy, of course, did not manufacture the DVD player that you are buying – the retail store is buying the merchandise wholesale and re-selling the product to you, the consumer, for a profit.
The same process is true for mortgage companies, no matter if you are dealing with a bank, broker, or mortgage lender. Even if the company is considered a “direct lender,” they are upping the price of the original loan in order to make a profit before they sell your mortgage to a wholesale lender after closing.
Surprised? It’s a little known fact, but mortgage brokers, banks, and all other retail mortgage companies sell their loans to wholesale lenders and/or investors that buy mortgages. Every company that is advertising mortgage rates in today’s market is selling the loan in one way or another. You are therefore paying them a retail rate on the loan while the mortgage company is selling it for wholesale prices, and making a profit on the difference.
So just like the millions of Americans who have taken to Costco for savings, you now want to purchase your mortgage wholesale. While it’s not as simple as joining a club, choosing to pass on retail mortgage lenders and instead work with an independent licensed loan originator is your best option. Loan originators can take your application and submit it directly to the wholesale lender, helping you bypass retail mark-ups.
Do the Math
Yes, loan originators do receive a commission for submitting your application to a wholesale lender. But the difference in fees between a single loan originator (an individual) and a retail bank or mortgage company is massive. Banks and large mortgage companies charge 2-3 percent fees not only to make income, but to account for their much larger operating expenses including staff, expensive office space, and other overhead.
On a $250,000 loan, a 2.5% commission for a bank would be $6,250. An individual loan originator making a more modest commission of 1.5%, for example, would make $3,750 commission on that same loan. That is a difference of $2,500, which is directly applied to lowering your closing costs and interest rate!
Ready for a Change?
At HomeJab, we have a different approach which we are calling “modern mortgage lending”. We are a group of individual loan originators, not a traditional retail mortgage company. We share an office space with other businesses to cut costs, and each loan originator does his own underwriting and processing. By significantly cutting costs, we are able to lower our commissions down to an average of 1.50%, significantly lower than every other mortgage company in the market today. You get the same loan, the same security, and the same home, but walk away with more money in your pocket.