Why Pay Retail?

Many home owners looking to improve their situation by calling their local bank. They are quoted rates that are specifically targeted to the homeowners themselves. This is very similiar to prices listed at a department store.

What they may not know is that most banks have two lines they offer. Retail and Wholesale. Wholesale rates are offered to mortgage professionals only and are typically 1/4 to 1/2 a percentage point lower. This is because the lending institution does not have to pay for advertising and staff to complete the loan transaction . The mortgage professional works for the borrower.

Utilizing a mortgage professional to get the lower rate (and in many cases) favorable terms can save the homeowner tens of thousands of dollars over the life of the loan.

The local bank also does not normally offer the flexibility of a mortgage broker. Mortgage brokers can move your loan over to a different lender if there is a problem or if interest rates drop. A local bank cannot do this with there in house programs.

Most brokers work with a large number of lenders, often in the hundreds. They use their expertise and past experience to 'shop' all of those lenders for a loan that is right for you. If you wanted to do the same thing, it would take an enormous amount of time and research.

By working with a broker, you can save yourself a lot of trouble. And since the broker gets your mortgage at a discount rate, you won't pay any more than you would at the bank. It's very similar to how retail stores buy their products in large quantities at a low price, and then charge you a higher price. It's how they make their profit. But that doesn't mean that you're paying more than you would somewhere else.

It is not unusual for a top notch mortgage broker to be able to offer an identical loan program from a major mortgage lender (Wells Fargo, Washington Mutual, Countrywide, etc.) with lower fees or rates than if a consumer were to go directly to that same lender

A mortgage broker may be able to arrange for a loan even when your local banker can't.

» DISCLAIMER: The information contained in this article on 'Why Pay Retail?' is a collection of contributions by licensed mortgage professionals and is not the opinion of Broker Outpost LLC. Always consult a licensed professional before applying for a mortgage.