HousingWire sat down with AIME Chairman Anthony Casa to discuss how brokers provide homebuyers with year-round low rates.
Q. We know that mortgage brokers save borrowers money by offering lower rates. But you’ve said that the real advantage is the increased buying power they deliver. Can you elaborate on that?
A. Of course! You’re correct that mortgage brokers have access to lower wholesale rates — usually between 0.5% and 1% lower than retail — but that’s only part of the story. You see, a lot of borrowers aren’t just looking for lower payments. They already know how much they can afford to pay each month. What they really want is to get as much house as they can within their budget — and a mortgage broker can make their money go farther. Let’s say a homebuyer’s budget for their monthly mortgage payment is $1,564. If they went retail with a 4.75% interest rate, they’d be looking at about a $325,000 loan amount. But with a 3.75% interest rate through a mortgage broker, they could look at homes up to about $338,000. And that could make the difference between getting their dream home or settling for something less.
Q. Is there any connection between the recent drop in mortgage interest rates and spring home-buying season?
A. The idea that seasonality impacts mortgage rates is a misconception. The only reason we refer to spring as home-buying season is that more homes go on the market and more people start shopping as the weather gets better. Now, with the recent rate drop, we’re expecting this to be a particularly busy home-buying season — but the truth is, mortgage brokers offer lower rates and increased buying power twelve months out of the year. For us, it’s always home-buying season!
Q. The media has been focusing on these decreased rates. Why is it such a big deal if mortgage brokers have been offering these rates to borrowers for some time now?
A. That’s the funny thing about it. The headlines should read, “Big Banks And Retail Lenders Are Getting To The Level Mortgage Brokers Were At Before The Rate Drop.” And broker rates are still between 0.5% and 1% lower than retail. But brokers don’t get national headlines like the big banks do. That’s something we’re looking to change with AIME. We want to shift the conversation and show consumers that mortgage brokers are the best option when it comes to purchasing a home.
Q. Can real estate agents benefit by partnering with a mortgage broker?
A. There’s no question! In fact, real estate agents and mortgage brokers have a lot in common. They both want the home-buying process to go as quickly and smoothly as possible. Also, they want the new homeowner to be happy with their purchase. That’s how they get referrals! Plus, a mortgage broker can help them get them into a bigger home and outbid other buyers — all while staying within their monthly payment budget. The truth is, homebuyers may forget who funded their loan, but they’ll remember their real estate agent — and a mortgage broker can make them look like the hero. It’s a perfect partnership!