The Thing the Mortgage Industry Does Not Advertise

Here is something worth understanding before you accept the next rate quote you receive. A significant portion of your mortgage rate does not go toward your loan at all. It goes toward paying for the lender's cost of doing business and depending on which lender you are working with that cost structure can be substantial.

What It Actually Costs to Run a Large National Mortgage Company

Think about what it takes to operate a major national mortgage lender. Massive advertising budgets that run into millions of dollars per month. Super Bowl commercials that cost more per thirty seconds than most people earn in a decade. Layers of regional managers, area managers, and corporate staff sitting between you and the person actually working on your loan file. Expansive office spaces in major markets. Big brand campaigns designed to create name recognition at scale. Shareholder return obligations for publicly traded companies that require consistent profitability regardless of market conditions. Executive retreats, top producer trips, and the full infrastructure of corporate entertainment.

All of that costs money. Real money. And that money has to come from somewhere.

It comes from the margin built into your interest rate.

As Judy Miller explains the low rate that big lenders quote when you first speak with them sometimes has an asterisk that does not get mentioned in the initial conversation. To actually obtain that rate you may need to pay three or four points upfront. The headline rate is real but the cost to get there is buried in the fine print. You are not just paying for your loan. You are paying for their org chart.

Why Leaner Lenders Operate Differently

Canopy Mortgage does not carry the mid-management expenses, the advertising overhead, the fancy office infrastructure, or the shareholder return obligations that large national lenders build into their rate margins. That leaner cost structure means the margin required to cover operating expenses is smaller which means the rate offered to borrowers can be more competitive without requiring points to get there.

This is not a new concept. It is the straightforward math of overhead and margin applied to the mortgage industry. A lender with lower operating costs does not need to extract as much from each transaction to remain profitable and that difference shows up in what you are quoted.

What to Do With This Information

If you have received a rate quote from another lender Judy Miller would like the opportunity to compare it directly. Bring the quote and she will show you what Canopy Mortgage can offer on the same loan type and amount so you can see the difference for yourself. After all as she points out what have you got to lose from a comparison.

Judy Miller is Branch Owner with Canopy Mortgage and has built her business on giving borrowers a straightforward look at what their loan actually costs and where that cost is coming from. Give Judy Miller a call to find out what the Canopy Mortgage advantage looks like for your specific situation and whether the rate you were quoted is actually as competitive as it appeared when you first heard it.

Sources

ConsumerFinancialProtectionBureau.gov
MortgageNewsDaily.com
NationalMortgageProfessional.com
Investopedia.com
Forbes.com