Click the Video to see how a Wholesale loan Pricing Calculator works. You will never see this in the public! Find out how to get the best rate available!
What is the truth about rates
The HomeOwnership Company, envisions a future where the path to owning a home is seamless and accessible for all. We believe that homeownership is fundamental to living a life of freedom and ease. We understand that this dream is achievable for most people with some common-sense changes to the current process. That's why we have reimagined the way people buy and sell homes by combining real estate and mortgage services into one company. This unique approach allows us to leverage both sides of the transaction to maximize your savings. Unlike traditional models where separate 5% real estate agents commission and mortgage brokers asking for 3% lender increases the cost of homes. Integrating both services—eliminating waste, lowering costs in a mortgage by 50%, and using half of the buyer’s agent commission as a realtor credit to pay your mortgage costs. The result? You win offers and save thousands when buying and selling a home.
Rate Truth: The Real Story Behind Your Mortgage Rate
Ever wondered how your final mortgage rate is actually determined? Today, we’re pulling back the curtain. Every wholesale mortgage company uses a pricing engine—a mortgage calculator that factors in key details like your credit score, loan-to-value ratio, property type, and intended use to determine your final rate and costs.
The core pricing adjustments, known as Loan-Level Price Adjustments (LLPAs), come directly from Fannie Mae and Freddie Mac. These are standardized across the industry. However, the biggest factor that impacts your rate—the one that can actually be adjusted—is the originator’s compensation. This is the only piece of the puzzle that varies, and it’s what ultimately influences the rate you receive.
At Rate Truth, we believe in transparency. Know what you’re paying for and how it affects your mortgage rate!
The Problem
Most Mortgage company set there lender paid compensation at 2% or higher but few are under that that causes the cost of mortgages to be unsustainable.
Traditional real estate and mortgage industries rely on outdated systems that prioritize high commissions over client savings. On a typical $600,000 home purchase:
- Mortgage brokers earn $11,600 (2.0% of the $582,000 loan amount).
- Real estate agents earn $30,000 in commissions (5% split between buyer’s and seller’s agents).
- That’s $41,600 paid to middlemen for services that are now streamlined through technology.
The current system is built on inflated commissions and referral-based marketing. Real estate agents and mortgage brokers prioritize their profits over your savings. Real Estate agents refer you to a mortgage company based on if they refer people back to them, not if it save you the most money. Homebuyers end up paying thousands more than necessary, while sellers are forced to raise prices to cover these costs. This unsustainable model has made homeownership unaffordable for many.
The Solution
Understanding Mortgage Rates and Loan Originator Compensation
At Rate Truth, we believe in transparency and empowering our clients with knowledge about the factors influencing mortgage rates, particularly loan originator compensation.
Loan Originator Compensation
The Dodd–Frank Wall Street Reform and Consumer Protection Act introduced regulations to protect consumers in the mortgage market. One significant aspect is the standardization of loan originator compensation, which is typically adjusted quarterly by lenders. Mortgage brokers have predetermined compensation agreements with lenders, often set as a fixed percentage of the loan amount. In contrast, correspondent lenders, who are larger entities with their own credit lines, establish their company's compensation structures and fund loans before selling them post-closing.
Impact on Mortgage Rates
The compensation structure of loan originators directly affects the interest rates offered to borrowers. Higher compensation can lead to increased interest rates, while more efficient operations and lower compensation can result in more favorable rates for clients. Understanding this relationship is crucial when evaluating mortgage options.
The Mortgage Process Simplified
To demystify the mortgage journey, here's a streamlined overview:
- Application Submission: Complete an online mortgage application.
- Documentation Collection: Provide necessary documents, such as pay stubs, W-2 forms, tax returns, bank statements, and identification.
- Loan Processing: Your application and documents are reviewed and verified for accuracy.
- Credit Evaluation: A credit report is obtained to assess your creditworthiness.
- Fee Assessment: All associated fees, including closing costs, taxes, and insurance, are calculated to create a Loan Estimate.
- Underwriting: The complete file is submitted for underwriting, typically taking a few days.
- Appraisal and Title: An appraisal determines the property's value, and a title search ensures there are no legal issues.
- Condition Resolution: Address any additional requirements specified by the underwriter.
- Closing Preparation: Finalize all documentation and coordinate with the title company for closing.
- Closing: Sign the final documents and complete any remaining formalities to finalize the loan.
Time Investment and Compensation
The time investment for processing a mortgage loan varies, but a streamlined process can be broken down as follows:
- Loan Setup and Processing: Approximately 3 to 4 hours.
- Condition Resolution and Follow-ups: Around 2 to 3 hours.
- Closing Coordination: About 2 to 2.5 hours.
In total, a loan officer may spend approximately 9 to 10 hours on a single loan file. Considering an average loan amount of $582,000, a 2% commission equates to $11,640. This results in an effective hourly rate of approximately $1,164. Even if unforeseen complications extend the processing time to 20 hours, the hourly rate remains substantial at around $582.
Our Commitment to Fair Compensation
At Rate Truth, we believe in fair compensation that reflects the work involved while ensuring affordability for all. By adopting a 1% compensation structure, we align our interests with yours, providing competitive rates without compromising service quality.
Why Choose Rate Truth?
- Transparency: Clear and open communication about all aspects of your mortgage.
- Efficiency: Streamlined processes to expedite your loan approval and closing.
- Fair Pricing: Competitive rates achieved through fair compensation practices.
We aim to make homeownership accessible and affordable. With Rate Truth, you can trust that you're receiving the best possible terms tailored to your unique situation.