Real Estate Finance Alerts

A Client recently asked, "How are you less expensive than a bank?  Since you are a broker, aren't you just charging more for the same loan?"  The reality is exactly the opposite.  As a broker, I have more lending options to find lower rates than do most traditional banks and credit unions in addition to a lower costs structure.  While I cannot guarantee to have the lowest rate/fee combination, I nearly always beat or at least match the competition.

A supersecret lender with lower rates just does not exist, although I keep hoping.  I simply have more options than most traditional lenders since they likely only use one or a small number of lenders to place their loans.  If you go to Bank A, they will show you what they can do while I can show you what nearly every major lender can do.  I specifically set up Huettner Capital with access to more lenders because the difference can be so great.  In fact, a large part of our competitiveness comes from searching for the best rate for a specific loan on a specific day.  The difference between lenders for the same loan can be as much as a quarter point or more to the interest rate!

The other major component of our competitiveness against banks and other brokers comes from understanding what each lender offers and how they treat different loan characteristics.  Understanding these nuances between lenders often results in a lower interest rate and provides flexibility to capture additional savings or eliminate a potential cost in the event of unplanned changes.  For example, in a falling interest rate environment, knowing each lender's relock policy is extremely important in the event rates fall enough to lower your rate.  Similarly, in a rising interest rate environment, it is extremely important to know the differences between each lender’s lock extension policy should you need to close later than planned due to a contingency sale.  Therefore, it is not simply having more options, but understanding the small differences between each lender.

Finally, Huettner Capital has lower operational costs than traditional banks.  I do not come to this conclusion simply with anecdotal evidence alone.  Empirical data comes from mortgage industry research comparing costs between brokers and bankers.  The study determined that brokers have a lower operating cost for benefits, office, and overhead than retail lenders.  It concluded that this is not only the reason that brokers originated 58% of all residential loans in 2006, but that they will continue to originate the majority of loans in the future. 

While I wish our competitiveness was as easy as having a secret lender, it comes from the combination of possessing more lending options, searching for the best rates, understanding the nuances between lenders and eliminating fees that others cannot.  In the end, not only are we more competitive than most traditional banks and credit unions, but most brokers as well.