Retail – vs. – Wholesale In Mortgage Lending: Getting The Best Value
The words “retail” and “wholesale” are not words consumers typically associate with securing a loan to purchase a home. Think about it. When contemplating buying a home or applying for a refinance of your existing loan, how often have you heard someone say, “I’m really confused as to whether or not I should get a retail mortgage loan or a semi-wholesale loan?” See what I mean? It just doesn’t happen. But, in fact, there are both retail and wholesale options to choose from when financing a new home or refinancing your current home. Let’s take a look.
In mortgage lending speak, obtaining a loan through a mortgage broker, mortgage banker, or directly from your bank would be considered the retail option. Obtaining a loan from an internet based lending company could be considered a semi-wholesale option. Both will provide you with a loan and both have their unique perks but the road to loan approval may be very different.
The retail route will safeguard you in countless ways. Mortgage brokers and bankers generally find their way to you through a referral from a family member or friend who had a great experience with them and wanted you to know they got a great deal and their broker or banker kept them updated the entire time. The broker or banker is thrilled to receive the referral and, thus, will work to ensure that they live up to the referral source’s accolades. There’s accountability!
There will also likely be a visible chain of command present when you go to meet with your mortgage broker or banker. They will typically have an office manager, an assistant to help with processing, and colleagues working for them. They may be a branch of a larger brokerage or bank so there is a hierarchy of professionalism that will be accessible to you as the client. That means that during the loan approval process you can reach any number of professionals who will also be aware of the status of your loan and will be able to assist you.
Other common traits of mortgage brokers and bankers include high visibility in the community. Most will work with clients in their own communities, will send their children to the schools in the community, and, as a result, tend to be involved in the community such as being a member of the local chamber of commerce or a volunteer for various organizations. That means that they have a lot at stake in ensuring that your experience working with them is excellent. All of this drives brokers and bankers to work tirelessly for you to assure their reputation remains in good standing.
Finally, because of their involvement in the community and their status as a small business owner, you will be able to do a bit of background work on your broker or banker just through running a simple search on the internet. They will undoubtedly have their own website, complete with testimonials, service work they’ve done and successes. Licensing information will be readily available.
The semi-wholesale route is a bit different. Although you may save a couple of dollars on fees, you will work with someone from the online source, exclusively via phone and internet, and will not go into their office. Your loan agent will not automatically have the same sense of familiarity of your community nor be driven by a personal referral. So there isn’t that personal accountability aspect. They will probably also be handling far more loans than your local broker or banker so you may feel more like a small fish in a big pond. Trying to reach your agent may prove far more difficult and the chain of command will not be nearly as visible as when you work with a retail broker or banker.
As with any major decision in life, particularly one concerning such a huge financial investment, you’ll want to carefully weigh the pros and cons of opting for the retail route or the semi-wholesale route when deciding how you’ll go about obtaining your mortgage loan. Do you want the luxury of being able to walk into your mortgage professional’s office to discuss paperwork, concerns or bumps in the road or do you feel comfortable doing all of that over the phone and via email? Are you comfortable working with your highly private information with someone you’ll never meet or would you prefer to work with someone you may very well bump into at the supermarket? Only you can decide what option is right for you. But, as always, if you have any further questions, feel free to contact me or your trusted mortgage professional directly.