A loan is like a 10 story building
To understand why us, I must first explain what is a Floor Rate Mortgage. All mortgage loans are given a range of rates that can be offered. If you think of this range as a 10 story building, it will allow me to more easily explain the concept.
- Every loan program has a Floor Rate which would be the bottom floor of the building.
- Every loan program also has a Ceiling Rate or maximum rate that can be charged on a loan which would be considered the 10th floor of the building.
Don’t pay more with the big lenders
Companies have the right to offer the Floor Rate on a loan but then they would not make any money to survive. So they raise the interest rate to make a little more money for themselves. Then, the larger that company becomes, the more overhead they have with employees, medical costs, building space, utilities, etc. This results in them raising the rate some more. Then they have to hire loan officers and underwriters to help with your loan application and approving of the files. This causes them to raise the rate some more. Most loan officers then have to raise the rate even more because they have to make a paycheck and feed their families as well. So even though the bank could lend to you at the Floor Rate, now with the additional costs and loan officer paychecks, they have to give you a Rate around the 6th or 7th Floor. As just an example, if the Floor Rate is 3% and the ceiling rate is 5.5%, most companies give you a rate around 4.25%.
Stop paying kickbacks for other lenders
Here is the dirty secret in our industry. Real Estate Agents refer about 90% of all the business to the loan officers and banks they work with. They know they have the power and have found a way around section 8 of RESPA which does not allow kickbacks. (A kickback is when a loan officer gives money to a Real Estate agent for sending them business.) The work around is now called an MSA or Marketing Service Agreement. 95% of your larger companies use this method to give money to Realtors to send them your business. That money has to come from somewhere so that estimated rate of 4.25% just went to 5%. They use the additional money from raising your interest rate to give the Realtors money for marketing.
The lowest rate possible, for everyone
Floor Rate Mortgages, LLC strictly prohibits this type of business and finds it disgusting. We have created the new company to try and alleviate these Marketing Service Agreements. We make our money by simply charging 1% Origination upfront and that allows us to offer you the floor rate for your credit profile.. We will offer the Floor Rate to every client on every loan. Because we are offering the Floor Rate, there will never be a need to get your loan anywhere else.
You can rest assured that we are the lowest rate in the industry and feel free to compare that to anyone because we will post our rates on our home page every day. If your Real Estate Agent is not referring you to Floor Rate Mortgages, LLC, then you are getting ripped off.