While moving around the mortgage market circles you may come across many terms that you have heard before. One term you may not have heard is that of the wholesale mortgage lender. We all know that wholesale is usually synonymous with a good deal, so is this an option you should explore?
A wholesale lender provides loans through a mortgage broker. The general public does not work directly with a wholesale lender. The wholesaler sets the daily market rate available, and the retail lender marks up the price, so they can stay in business by making a profit.
The wholesale price set by the lender is based on the market. While the wholesale lenders prices are available, most sites are password protected to be accessed by the retail clients that actually “sell” the mortgages. You may come upon a site that is not password protected, but the information would best serve you as a bargaining chip with a retail broker.
The information given by wholesale lenders is extremely detailed and cumbersome. If you did happen upon the information and wanted to use it to your benefit you would have to understand it. Understanding it takes quite a bit of research, so finding a broker that you can trust is a better options.
Once you approach a broker that you would like to work with you can work out a plan to bring up the wholesale market. You would want to know all of the basic information about mortgages. You would say something along the lines of “I am interested in locking in a price on a 20 year fixed rate mortgage, what is the best you can offer me?”
When you consider the wholesale mark up for the buyer, think of all the work that the mortgage lender must do to secure your loan. They need to: run credit checks, pay for advertising to attract customers, counsel and advise the borrower, verify employment, work with the stacks of paper to process the loan and make sure the borrower is aware of insurances needed. This is a large amount of work and it is only fair to pay for it.
You may actually be dealing with a company that is considered a wholesale lender. This could be misleading as you won’t actually be receiving the true wholesale cost of the loan. You will actually deal with representatives of the wholesale lending network that have the same name as the wholesale lender.
When thinking about wholesale mortgage lenders think of it as a distribution center. You may be able to go to a local store to pick up a pack of product that you would like. If you wanted to go to their wholesaler you may have to go to a 100,000 square foot building and face many dangers to find what you would like. Then the company would have to figure out how to sell it to you. Just knowing the terminology is enough to get you the best deal.