Wholesale Mortgage Lenders
Wholesale mortgage lenders are basically the lenders that smaller mortgage brokers use to offer the borrower a mortgage. The broker will normally get the mortgage at a wholesale rate from the wholesale mortgage lender and will add an amount of compensation on top for themselves when selling it on to a customer. (The amount depends on the broker but they have to keep it competitive or there is, of course, no point)
Normally the rate is a lower one but some of the smaller brokers add on a lot of compensation, sometimes to the point that the interest works out even higher than normal!
What are the Advantages and Disadvantages of Wholesale Mortgage Lenders?
Some advantages of going for a mortgage broker than use wholesale mortgage lenders is that your application can be treated individually as the brokers will have a pool of wholesale lenders to choose from and should consider your unique situation to use the best wholesale mortgage lender for you.
Another advantage is that if your application for a mortgage is unsuccesful with one lender for whatever reason, the broker can try another wholesale lender that might prove to be succesful and will still be of a good rate to you. It takes out a lot of the leg work in finding your mortgage – Although a mortgage is definitely something where “leg work” is definitely advised! It will be one of the most important investments of your life! It shouldn’t be rushed.
Disadvantages? There are a few – One disadvantage is if the loan officer that you’re going through at your local broker is a greedy so and so! Some loan officers put an extortionate amount of compensation for their efforts which pretty much neutralises the whole point of going through the broker for a better mortgage rate.
A second disadvantage that links in with the one above – Wholesale mortgage lenders rates and portfolio are not available to the public and the only choice you have is to go through a mortgage broker. So, you’ll never really know whether that deal for the mortgage your broker is quoting you is actually a good deal or how good the mortgage rate was before your loan officer added his commision on top!
Overall, there are positives and negatives to this method of getting a mortgage – You may get a better rate but you may be unlucky and get a money-hungry loan officer! The best way to use this method is to play a few brokers off against each other and compare…but I imagine that was the reason you went for a broker in the first place – To compare the market for you! It’s a double-edged sword.
I hope this page on whole mortgage lenders helps you to make a decision.
