I can't tell you how often I'll have a potential mortgage customer ask me "What are your rates?", as if this were a black and white question. I think it's the fault of our industry and how we've marketed our product that has people thinking I just have one rate! Yes, banks typically do have a "rate of the day". It is what it is and that's it! But, with brokers (I'm both a banker and broker) the answer isn't so simple.
I have a relationship with many different wholesale lenders (Wells Fargo, Bank of America, Suntrust, etc.). Depending on the product, these lenders price their loans differently on the wholesale side. By pricing, I mean how much will they pay the broker (yield spread) for a specific loan/rate. For example, a 30 year Fixed Rate mortgage, which is the most popular mortgage loan by far, will have different pricing depending on credit score, loan to value (what percentage of the home value are you looking to borrow), cash out for refinances, investment properties, multi-family homes...the list goes on.
As a broker (I broker most of my business), I need to look to multiple lenders to find the best pricing for my customer for their specific scenario. By best pricing, I mean the best rate that will also compensate me for my efforts. An option I'll also offer is to give the customer the best Par (best wholesale rate with no yield spread paid to the broker) rate and have them pay origination point(s) to compensate me. This is a big advantage to just having one "rate" to quote.
I know that sometimes customers think I'm trying to skirt the question when I tell them I can't just blindly quote a rate. This is because some of my competitors quote unrealistically low rates in order to try to get business and then 'bait and switch" when the time comes to lock the rate. This isn't how I work (and I'm sure I've lost a lot of business because of that) and my customers eventually appreciate that.
Next time a customer calls me, I want to hear "What is MY rate?"!
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