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Here is why you get a lower mortgage rate when you work with an independent mortgage broker like myself instead of going to your big bank or credit union or direct mortgage lender. When you get a mortgage, that money goes through three steps, right? It starts with Fannie Mae and Freddie Mac. And then it goes down to the corporate lender level, where the underwriters and the funders are. And then it goes down to the local level, where the loan officers are, you know, the people that you talk to. Right? And from the local level, they send it up to corporate for approval and funding, and then corporate sells the loan to Fannie Mae and Freddie Mac.

Often people think they save money when they work with a big bank because the big bank has all the money. So clearly, you know, by not working with a broker, you don’t have a middleman. So that would cost less. But actually, the broker does not add a level. The broker works in place of a level, right? When you call Chase bank and you talk to somebody at a Chase branch, they’re then sending the loan up to Chase’s corporate level. Okay? When you call Mortgage Austin and you talk to me, I’m sending the loan up to a wholesale lender like United Wholesale Mortgage. And United Wholesale Mortgage does not have any mortgage loan officers on staff, right? You can’t get a mortgage from UWM without working with a broker, okay? So instead of working with a local branch, you work with a local broker and you save money because the local broker has way less overhead than the local branch, okay?

The local branch, first of all, is captive to one corporate lender. And so when that lender decides that they have too many loans so they’re going to increase rates for a while, that branch just has high rates for a while, and there’s nothing they can do about it unless everyone at the branch quits the company and goes to a different company. When you’re a broker, you know, we do have 20 or 30 or 50 lenders to choose from. But the truth is most brokers have one or two lenders that they love, that they use all the time. And if that lender or two decides they’re going to have high rates because they have too many loans or they’re going to change a part of their process and make it way worse the same day, that broker can decide they have a different one or two favorite lenders and start sending their loans to those lenders. And that keeps the wholesale lenders on their toes. They’re always having good pricing and being reliable because any changes can immediately result in them losing business compared to at the corporate level. The branches are basically stuck with them for better or worse.

The other three reasons all have to do with just overhead at the local level. Have you ever been inside of a bank branch? Okay, they’ve got the marble flooring, the receptionist, all kinds of people working there. Have you ever been to an independent broker’s office? Probably not, because we all work out of these tiny little room executive offices that, you know, we don’t even have guests arrive to. Because it is much, much less expensive to operate that way. And when we have less expenses, we can pass those savings to you.

Our clients’ staffing is a huge expense that many branches are just required to have. I’ve worked in branches where they had five people touch the loan before it ever got sent up to corporate. Okay? And all of the staff, all of these loan processors and operations managers and regional managers and branch managers all have to make something. Okay. When you work with me, you will actually just work with me the entire time. I’m one of these tech nerds. I have a lot of stuff in the background that helps me produce at a level that, you know, other, you know, local branches might have five people where I just have one and I’m doing it faster. And part of the reason is because of technology and just because of a few other ways that I run my business. But the result is that it’s just way less costly, which results in a lower rate for you.

And the final reason is also huge. And it’s becoming more popular, it seems, every day, which is kickbacks, or as the industry calls them, co-marketing agreements. It is very popular for real estate agents to pay thousands of dollars a month for Internet leads and, you know, advertisements. And loan officers can pay half of that marketing budget on behalf of their realtor, and in exchange, the realtor will then refer all of their clients to their new preferred lender. I do not participate in anything like this. I don’t even go out to lunch with the people who send me referrals because I’m just an introvert. But you can rest assured, if you were referred here, it is because your realtor or your attorney or your friend or family member just believes that I am the best person to help you. They know that what I’m talking about on this website is true. They’ve maybe experienced it for themselves. And most importantly, I did not pay them. I do not pay any kickbacks because I’ve seen the effect that these kickbacks have on interest rates. Eventually the money has to be made back somewhere. Okay. And when you operate a business like mine that is very lean and we just don’t have the overhead that all of these local branches are encumbered by, you just get a low rate right up front.

Now you might hear from lenders, they’ll say we can meet or beat any rate, we guarantee we have the lowest rate, we’ll meet or beat anything. That is typically an actual challenge. They’re hoping that you will not shop around and you’ll take their word for it because then they’ll just charge you the legal maximum. And then when you do shop around and you meet somebody like me who right up front just has much lower rates, then all of a sudden they can cut $5,000 off of the fees or lower your rate dramatically because again we’re all shopping at the same store. We’re all going to Fannie and Freddie. And so pretty much any lender or broker could meet or beat just about anything. The big difference is that right up front I will just give you rates that are well below the market average because of our lower overhead. So if that makes sense to you, if you’d like to find out more about if you’re pre-approved or what rate you could qualify for in your situation, please schedule a discovery call. I’d love to learn more about your situation and how I can help you.