This questioned has been asked of me many times.  Why are rates different from lender to lender?  To answer that question we need to understand two pieces of the loan puzzle (volume & pricing). 

VOLUME- Is the loan originator a one man shop or a very large corporation with many different investors?  Our industry thrives on volume and a company who can originate a high loan volume will received preferred pricing.  The one man shop may have 5 different lenders where as a very large mortgage shop (MIC Inc. has 450 loans officers nationally) may have 80-100 mortgage companies that they deal on a daily basis.  So high loan volume equates to better rates on a daily basis that the originator can quote to the consumer.

PRICING - All loan officers use a pricing matrix or pricing engine with every mortgage investor.  This mathematical formula weighs the risk of the loan based on many different factors and determines the final rate the consumer can receive on the loan.  With the rate comes YSP known as Yield Spread Premium.  Yield Spread Premium is a bonus paid to the loan originator or banker who charges a higher rate to the customer. In turn, the broker or banker will receive a higher commission for charging that rate.  Since all loans are like a living breathing entities some require very little attention and some require a ton of attention.  Meaning a loan that may consume many more hours to complete will receive a higher rate because of the amount of work required.  On the other hand, some broker and bankers automatically charge the consumer 2-3 points on the back to stretch their commission further.  Is this right?  In my opinion NO.  We as originators and bankers deserve to be fairly compensated for our time and experience.  It is too bad that there are loan officers out there who do not care about the consumer!  I guarantee my customers receive a great rate and I will only ask for fair compensation.

This is why the consumer should shop 2-3 mortgage / banking companies for the best loan!

I hope this short blog clears the air on why rates are different!  I have been in the banking industry for 18 years now and I will guarantee a fantastic experience and a great rate if you call me for a loan.  I can back that up with many testimonials from past customers.  I look forward to your questions and phone calls in the future!