The vast majority of all loans being issued by BofA, Wells Fargo, So EZ Mortgage, US Bank, Quicken Loans, and all the other lenders you can think of, weather it be broker, corespondent, bank, or direct lender,
comes from Fannie Mae Ginnie Mae & Freddie Mac.
This was done in order to standardize lending across the USA so that homeowners can get the same disclosures and the same rates from anyone they speak to. However the BIG SECRET, is that Fannie Mae Ginnie Mae & Freddie Mac pay a premium to all lenders, including BofA. The way it works is Fannie Mae buys the loan before or sometimes shortly after your loan funds. The lender gets the credit based on the margin they keep, not the rate, they can sell you a high rate and make less than if they sold you a lower rate.
The lender needs to decide how much does it cost to originate loans and still make the desired profit margin. The amount of credit they keep before applying some if any to your closing cost depends on how expensive it is for them to be in business. The more advertising, overhead, office space, 100k sports cars, boats, million dollar homes on the beach, Class A motorhomes, office staff, the more expensive it is! To the contrary, the more referrals they get, the less expensive it is. A company that can make their business by referral does not advertise because it's so easy to work with referred clients. Referrals normally already know what it takes to get a loan and were referred by someone else who has a similar profile. The more A paper loans I do, the more A paper referrals I get. The more referrals, the less work, the less work, the less I need to charge.
Eventually some point in between 2000-2008 the cost to lend was becoming so cheap that rates started to fall and someone from the united states called someone in London and told them, rates are too low, we need them to be higher. That phone call landed one man in prison for life and a bunch of homeowners paying higher interest than they should. Luckily the perpetrator is now out of the way and regulations have been implemented along with the government takeover of Fannie and Freddie. Working professionals with integrity can operate in an honorable environment. The cost to lend on US real estate is getting cheaper and cheaper. This could result in stable low rates forever until eventually, there is little to no cost to borrow money.
The stable rates will lead to economic optimism and consumer confidence. Investors will be able to leverage large amounts of money with less risk, confident that rates will remain low. That will create jobs and the trend is up on everything except rates. High rates means the economy is moving too fast, low rates means we are were we want to be. In my opinion, for California and NY only, I think 1.99% on a 30 year fixed will be obtainable in the near future.
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There is, call Michael Hansen with So EZ Mortgage
Directly at 855-955-7639 |
The reason you need to be diligent and follow our post is there are so many ways to structure a loan these days, many loan officers do not have a clue. They do not care about your home equity as much as you do. Educate yourself, be prepared and don't be afraid to ask your loan officer questions. It's a good way to build a trusting relationship.
