Shmuel Shayowitz (NMLS#19871) is President and Chief Lending Officer at Approved Funding, a privately held local mortgage banker and direct lender. Shmuel has over two decades of industry experience, including licenses and certifications as a certified mortgage underwriter, residential review appraiser, licensed real estate agent, and direct FHA specialized underwriter. Shmuel provides a uniquely holistic approach to comprehensive real estate and financial matters that goes well beyond any single transaction. Shmuel is an award-winning financier recognized for maximizing the short-term and long-term objectives of his client. As a contributing writer to many local and regional newspapers and publications, his insights have been featured in the media for many topics, including mortgages, personal finance, appraisals, and real estate trends.
Competition is usually beneficial for consumers, especially when it comes to comparable offerings. When suppliers know that their product can be shopped and matched, it often prompts them to deliver their best price upfront. Despite over 90% of conventional loans being sold to the same FHFA Agencies, not all loan sources are equal when it comes to getting “the best deal” for their clients.
Let’s start with “margin.” Typically, the margin is the profit that a particular lender or bank is looking to make on a given loan. Of course, pricing varies at the different mortgage companies, but quite common is the fact that larger organizations need to incorporate their massive overhead and infrastructure costs into the equation. More hierarchy and layers of personnel mean more “touches” and a higher cost-per-loan, resulting in a higher rate or fee to the consumer. When dealing with an independent mortgage broker, they also have their compensation added into the equation, which often impacts the consumer’s offering.
The next differentiator is “execution.” Not all lenders are created equal in this category as well. Here I am referring to the efficiency, quality, and performance of the mortgage entity. More nimble lenders will have greater efficiency, which will lead to a quicker process, cheaper processing, and a faster transfer to the end investor or servicing company. When lenders have more experienced and knowledgeable loan originators, their “pull-through” is greater, which means less fallout and waste. These companies are rewarded with more favorable pricing and consistently better prices.
Longevity matters immensely in this industry, especially as it relates to the options being offered to the consumer. Ever wonder why so many loan officers bounce around from one organization to the next so often? Of course, this isn’t always the case, but often enough, the offering isn’t as compelling as it was thought to be for the originator, so they depart to the next bank or company, hoping for a better outcome. For smaller or newer companies, their lack of long-lasting established relationships with the big banks give them lest options and offering to their clients. More established companies are able to quickly compare and contrast their myriad of options to provide the best offering to their client.
As a regional direct-lender, I am extremely proud that Approved Funding can excel in all of these categories, which is a tremendous advantage for our clients. While other companies are raising their rates and margins to make up for lost volume, we have kept our pricing firm and maintained a lower industrywide average interest rate for our patrons and partners. At a time like this, when interest rates have inched higher in the marketplace, finding those lenders that still offer aggressive rates and terms without compromising service and expertise is more valuable than ever!
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