How Much Did You Overpay For Your Mortgage Loan?
2020 was a big year for mortgage loans. Interest rates fell and millions re-financed or purchased a new home. For the vast majority of borrowers, they looked at the rate and took it. Could they have done better on the rate or did they overpay? Winning Mortgage, Winning Home is designed to prepare borrowers for getting a better rate.
Let’s look at one example. Most are familiar with Rocket Mortgage, right. They spent about $1 billion in advertising last year alone! What did they get for that $1 billion? They made $15.9 billion revenue selling these loans and made about 1,150,000 loans. That’s $13,800 per loan they walked away with. These loans were 82% conventional (sold to Fannie Mae and Freddie Mac) and 15% FHA. Of the loans they sold, Rocket sold 98% of loans to government and GSEs (GSEs include Fannie Mae and Freddie Mac). The average credit score was 756!
In addition to the loan sale profits, they retained servicing on most of the loans, putting a steady stream of money in their pocket for a number of years in the future. By a general calculation, this means that Rocket was probably making about 5/8% to 3/4% spread on every loan in addition to 1/4% on retaining the servicing.
Would you like to get a mortgage loan and pay less than $13,800 for it? What if you need a little more knowledge or guidance if you don’t have that 756 credit score? Should you be paying 5/8% to 3/4% extra interest plus the 1/4% servicing charge above the lender’s cost for your loan? That’s the goal of education through mywinningmortgage.com and Winning Mortgage, Winning Home. Pick up a copy for less than the cost of two lattes and find out what you should expect for the interest rate rate to get your best loan rate.
According to new rules put in place which begin in January 2022, Fannie Mae and Freddie Mac will be limited to purchasing $1.5 billion each from any one lender during a rolling year. Rocket made $262 billion of these loans in 2020 and sold almost all to these two entities. So this company alone will need to reduce the loan volume by $259 billion (by 99%) if selling to these entities for cash or sell under alternate methods. How will that affect your rate? Fannie Mae and Freddie Mac are major players (you could say THE GORILLAS) in setting the low end of mortgage rates.