Wholesale loans

Wholesale loans
Is it possible getting mortgage loans at a wholesale price? Yes, definitely one can get loans at a wholesale price. Like any other things in the market, mortgage rates could be wholesale or retail rate depending on how educated and savvy you are at being a consumer. Before starting to shop for the mortgage, make sure that you have the knowledge about how the mortgage rate is determined and the costs that are associated for getting a low interest rate. Most of the mortgage loans are sold off at the retail rate like any other products in the market. If you are accepting the retail rate then you are probably overpaying by hundreds of dollars. You need to understand the difference between the wholesale rates and retail rates.

Wholesale mortgage loan rates vs. retail mortgage loan rates

Most of the borrowers are fully naïve and don’t know that the lenders and the mortgage brokers mark up the interest rate for commission, and the mark-up is known as the Yield Spread or the backend fee within industry. If the rate is marked up by the Yield Spread and without you knowing, then understand that you have received a retail rate. Therefore, the advertisements in newspapers, on television, or on the radio are advertising zero point loans and you could remain assured that the interest rate is associated with the loan and would have hefty Yield Spread attached. Therefore, you would be getting the loan at a high rate. The mortgage lenders and the brokers mark the interest rates, as wholesale lenders would pay them a bonus for charging the borrowers above the mortgage rate, and this bonus is known as Yield Spread Premium.

Protect yourself and make sure that you are actually getting a wholesale rate loan when you are applying for loans. Make sure that it isn’t a scam.

Getting loans at wholesale rate

Following are great ways for not paying the Yield Spread Premium or overpaying for the loan:

 Make it a point to tell the mortgage broker that you want the Par Pricing. This would tell lenders that you are well aware of the game and wouldn’t tolerate the backend fee.
 Make sure you review Good Faith Estimate, cost breakdown of the loan that all brokers need to send within the three days after application. This remains the federal key. They also need to indicate the Yield Spread Premium amount if applicable. However, make sure that the Yield Spread Premium is zero.
 The most important point is to make sure that you shop at a minimum of three to four brokers in order to get the best deal, the best Par Pricing rate. Comparison could be easily done sitting at home itself. With a click on the computer mouse, a page full of mortgage brokers will pop up. Online shopping is one of the most preferred resources to find best available wholesale loans. Choose a right lender for getting a loan at wholesale rate.