The meaningful to Obtaining Wholesale Mortgage Rates

The meaningful to Obtaining Wholesale Mortgage Rates

There are a plethora of mortgage comparison sites that potential to help you get the best mortgage possible. The “best” mortgage possible by the majority of all standards method that you are either getting a very low interest rate or paying low fees. Perhaps you would be lucky enough to get a low interest rate and pay low fees. It is important to consider that if you indeed want to get the lowest rates, and preferably the actual wholesale rate, you are going to have to pay fees. The following pointers will help you acquire low interest rates on your next mortgage.

  • The first step is to work with a mortgage lender that is transparent in the way they conduct their mortgage origination practices. This method that all fees are disclosed including provide spread premium which is a rebate that a wholesale lender pays the origination mortgage company on a home loan transaction. You can’t possibly acquire the lowest mortgage rates unless you how your mortgage broker or loan officer is being compensated.
  • The second step is to choose how you want your loan officer to be compensated. If you choose to pay an origination fee (a standard fee to originate your mortgage) you have the best chance of obtaining a wholesale interest rate. This is because the loan officer or mortgage company is being compensated for their work by you and not relying on the lender to offer them a rebate if they offer you a higher interest rate loan. If you do not want to pay an origination fee for some reason, you likely will not receive a wholesale rate. The mortgage company will increase your rate over the offered wholesale rate in order to generate provide spread premium. This YSP (provide spread premium) will be a percentage of the loan amount that the lender will pay to the mortgage company for offering a higher rate than wholesale.
  • The third step is to set a limit on what you are willing to let your mortgage company earn from your business. Mortgage Brokers can make anywhere from 1-4% of the loan amount on a typical traditional or government mortgage. Set your limit (let’s say 1%) and see what kind of terms you are offered.

An ideal loan would be one in which you are receiving a wholesale rate and paying no more than a 1% origination fee, or are paying 0 points in origination and taking an interest rate slightly over wholesale so the mortgage company is able to receive 1% in YSP from the lender.

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