Mortgage Loans Wholesale

By Rick Saroukhanian

Mortgage Loans at wholesale prices; is it possible?

The answer is a definite yes. Just like any other product in the market, mortgage rates can be either retail or wholesale depending on how savvy and educated you are as a consumer. Before you start shopping for a mortgage, make sure you educate yourself about how a mortgage rate is determined and what are the costs associated with getting the lowest rate. Most Mortgage loans are sold at retail just like many products such as furniture, appliances, electronics and so forth? If you accept retail interest rates when refinancing or purchasing you could be overpaying by thousands of dollars upfront and many thousands of dollars every month for the life of the loan. You must understand the difference between retail and wholesale rates.

Mortgage Rates at Wholesale Vs Retail:

What is the difference between a wholesale mortgage rate vs. retail? Most borrowers are completely naïve and do not know that lenders and mortgage brokers mark up their interest rate for a commission, this markup is called a "Yield Spread or backend fee" within the industry. If your rate has been marked up by a Yield Spread and without your knowledge, then you have received a typical retail rate. So when you see ads in the TV, Radio or paper advertising 0 point or 0 cost loans then you can be assured that the rate associated with that loan will have a hefty Yield Spread attached to it. So in essence, you will be getting a very expensive retail loan. Lenders and mortgage brokers mark up interest rates because the wholesale lender pays them a bonus for charging you above market mortgage rates, this bonus is the Yield Spread Premium.

Example of a Yield Spread Premium when Applied to a Mortgage Loan:

Let's presume you want to refinance your home. Your balance is $200,000. Your local lender or mortgage broker tells you that you qualify for a 6.5% interest rate and charges you 1% for the origination fees or sometimes called points. What most people are not aware of is that the broker may also be getting .05 % from the wholesale lender in the form of a "Yield Spread Premium". In another words the real wholesale 0 cost of the loan or "Par Pricing" would be 6%. The end result is that your broker pockets $2,000 from the Yield Spread Premium along with the upfront cost of 1% which is another 2,000 and you get stuck paying retail mortgage rates for the lift of the loan. This in my opinion is a complete scam and should not be tolerated. So how do you protect yourself and make sure you are getting wholesale rates every time you apply for a loan?

Get Mortgage Loans At Wholesale:

The best way to avoid overpaying or paying Yield Spread Premiums is:

• Make sure that you tell your mortgage broker that you want "Par Pricing', which basically tells them that you know the game and will not tolerate back end fees.
• Review the "Good Faith Estimate', the cost breakdown of your loan, which all brokers must send to you within 3 days of the application, this is a federal law. They have to indicate, in small print mind you, the amount of Yield Spread Premium if any is charged. Make sure it states 0
• Most important, make sure you shop with at least 3-4 brokers and get the best available "Par Pricing" rates from each. You can do this simply from your coach at home by going to our site listed below and you will have 4 offers from different mortgage brokers all fighting for your business.

Happy hunting and the best of luck on your next purchase or refinance endeavor.

For more information about where to go to have mortgage brokers come to you and fight for your business go to http://www.RealEstateInvestorsLife.com

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