Who Has the Cheapest Mortgage? The Answer Might Surprise You!

Who Has the Cheapest Mortgage? The Answer Might Surprise You

If you are purchasing a new home, you are likely asking, "Who will offer the best deal?"

This is an important consideration. Over a 30-year loan, even a small difference in interest rates or closing costs can result in thousands of dollars in savings. Many assume that large retail banks or well-known nonbank lenders offer the most competitive rates due to their size.

However, recent data shows the opposite. For the lowest mortgage costs, consider working with a mortgage broker rather than a retail lender.

A Mortgage Broker is Cheaper Than Retail

The $10,000 Difference

According to a comprehensive study analyzing 2023 Home Mortgage Disclosure Act (HMDA) data, borrowers who work with an independent mortgage broker save significantly more money than those who go directly to nonbank retail lenders.

The study found that consumers save an average of $10,662 over the life of the loan by choosing the wholesale channel (brokers) instead of the retail channel.

Lower Rates and Lower Upfront Costs

You may wonder if these savings require higher upfront costs.

The data indicates that brokers offer advantages in both upfront costs and interest rates.

• Retail Lenders: On average, borrowers paid 148 basis points upfront to secure an interest rate of 6.60%.

• Mortgage Brokers: Borrowers paid only 115 basis points upfront to secure a lower average interest rate of 6.58%.

In summary, broker clients paid less at closing and secured lower monthly payments.

Big Wins for Veterans and Minority Borrowers

The study also identified significant savings for certain groups of borrowers.

• Veterans: If you are using a VA loan, the broker advantage is massive. The study showed that VA borrowers save an average of $13,432 per loan when working with a broker. Furthermore, VA borrowers in the wholesale channel secured an average rate of 6.26%, compared to 6.40% from retail lenders.

• Minority Borrowers: The wholesale channel also improves accessibility. In 2023, brokers achieved a 70% approval rate in Majority Minority Census Tracts, compared to 58% for retail lenders.

Why Do Brokers Offer Greater Savings?

As a mortgage broker, I represent your interests rather than those of a single bank.

Retail lenders are limited to their own products and pricing, so if their rates increase, so do yours. As a broker, I access the wholesale mortgage channel, allowing me to compare options from multiple lenders and find a program that matches your financial needs.

Wholesale lenders compete for your business, which results in lower rates and fees. This competition drives the savings identified in the study.

The Bottom Line

The data is clear: independent mortgage brokers provide better rates, lower costs, and higher approval rates than retail lenders.

If you are ready to explore your savings, contact us today to compare your options and ensure you are not overpaying for your home loan.

Meet the Broker:

Freddy Kling, Simplicity Mortgage

Simplicity Mortgage is a one stop mortgage shop in Port Orange, Florida, where I make homeownership dreams come true all over the State of Florida. Our extensive portfolio and simplified loan process allows us to close loans quickly and successfully, while providing each client an exceptional customer experience.

I come from a family of entrepreneurs and have always understood the value of integrity, challenging work, and dedication. It is extremely important to me that clients and referral partners appreciate that I am available and responsive around the clock.

I have been a resident of Florida for over 50 years and graduated from Embry Riddle Aeronautical University with a bachelor's degree, majoring in computer science and a minor in mathematics. Before the mortgage industry, I was a Senior Principal Program Manager for the world’s fourth largest software company.

Call me today to discuss your real estate goals!

386-401-9000

Port Orange, Ormond Beach, Daytona Beach, Daytona Beach Shores, Ponce Inlet, New Smyrna Beach, Deltona, Orange City, Debary