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How can we offer lower rates?
Most loans are generated through Fannie Mae or Freddie Mac, and the mortgage rates are based on treasury notes and the 10 year Index, not the prime interest rates. They are serviced by banks and institutions that originate, buy or trade for them from other lenders.
Over 65% of the mortgage loans at the banks are generated through brokers, each bank has 2 mortgage departments:
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Retail Lending Department: it cost the financial institution thousands of dollars to originate loans. Not to mention the expense of a salaried staff, expensive buildings and continuing education and certification.
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Wholesaled Lending Department: they contract with mortgage brokers, like Alamo Premier Mortgage Group, who are certified by Fannie Mae, Freddie Mac, as well as the VA and we are regulated by the Texas Savings and Loans Department.
The wholesale lending department just has to is buy a complete loan without worrying about appraisals, surveys, contracts, etc. They don’t look at documentations, processing, credits report, or job history. They buy a complete loan, it is that simple.
The rates at the retail side are 3/8 to one full point higher in most cases to compensate them for the overhead cost.
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