The bank?
The mortgage company?
The credit union?
No, no, no to all three.
CLUE:
Look on the bottom of that mortgage application --- or all those old closing documents. BINGO! No, not Bingo---Freddie Mac and Fannie Mae. Of course, if you are independently wealthy and have paid cash for your home you would be clueless.
Enough fun.
Mortgages and money are serious business. Bonds and treasuries trading bell to bell in 1/32 of a second determine your rate. How? The middlemen---wholesalers (1000s of them)---have the nerve wracking job of committing, underwriting and closing HUGE sums committed exclusively to mortgage paper dollar for dollar---and usually within 120 days! The yield at the moment they commit determines your rate. If they commit when yields are low that wholesaler should have the best pricing. If the yields continue to drop their pricing will not be as competitive.
Banks and credit unions align with one wholesaler in exchange for their name on the coupon book and to save time and cost---Good business decision for them. Mortgage brokers have access to all the wholesalers and “the wholesaler of the moment” (the wholesaler who committed when yields were lowest). More work for the mortgage broker, but better for the client. You could say Fannie and Freddie are “big sister” and “big brother”. The funding for your conventional mortgage is federally regulated and securitized by these two federal entities after their middlemen---the wholesalers---underwrite and approve or deny all mortgage applications from banks, mortgage brokers and credit unions.
The wholesaler’s responsibilities are overwhelming: Fast marketing and pricing to banks, mortgage companies and credit unions; underwriting using only Fannie/Freddie guidelines; preparing Fannie/Freddie documents for closing and funding; and servicing (book-keeping) for Fannie/Freddie as the market continues to spin.
Understated, but we hope you have a better understanding of where your mortgage money really comes from. We believe that knowledge is king/queen and should be shared---to educate our clients, to make their mortgage a tool that fits their financial DNA and to earn our client’s trust and business.
#1 question?
“What is the rate today?”
Please, reread. We are very aware that it is genetically engineered into all of us to believe that a rate quote is our rate. We can always give you a generic range for that moment, but until we know that your job history, your credit scores, your assets, your income, your down payment, your property type, etc. meet all Fannie/Freddie guidelines for the mortgage program you want---it is only a quote.
#2 question?
"Is a banking relationship important?"
Please, reread. :)
Step up to The Best!
Jeri Allen
