Dear Mortgage Enthusiasts,
As we went over in the last installment, you have a wealth of options when deciding where to go for help with your home financing. While obviously biased towards mortgage brokers, there are admittedly circumstances where a broker, bank and direct lender could all make sense. There is one option that never makes sense, and that’s Quicken Mortgage.
First, some evidence…
These were recently posted on LinkedIn by a fellow mortgage broker. It is a Loan Estimate (LE) from Quicken’s Retail Division. It shows a quote for a 15 year fixed refinance. The interest rate is 3.75% and there are 2.5% in Points for the quote. Points are additional closing costs from the lender to get the quoted interest rate. Typically you pay points to get a lower than market interest rate.
This is a quote for the exact same scenario from Quicken Wholesale just 6 days later.
Quick aside on Wholesale vs Retail. When you go to a company’s retail division, it means you are working directly with the company as a consumer. If you are working through the company’s wholesale channel it means that you are working with a broker as an intermediary.
This quote shows that an interest rate of 3.75% through Quicken’s Wholesale channel has a 1.531% credit attached to it. This quote does not include the mortgage broker’s compensation. Most (most does not mean all) Mortgage Brokers make somewhere between 2.0%-2.5% per transaction. So that means that a broker would be able to offer you a 15 year fixed through Quicken Mortgage at a rate of 3.75% with between .50% and 1% in Points.
So this means that you could get the EXACT same mortgage, from the EXACT same company, but if you go directly to that company you could pay between 2% and 1.5% more in fees. In this example that’s between $3,195 and $4,260. Do you have a mortgage? Multiply your balance by 2%
So why the hell would Quicken charge more when you go directly to them? I have no idea, but I’m going to throw out some educated guesses anyway…
- You called them. They’ve already got you.
- Quicken knows that you assume they’re the Walmart of Mortgages. Walmart is the cheapest place to get all sorts of crap, so Quicken is the cheapest place to get a mortgage…right? WRONG.
- Super Bowl Commercials are not cheap.
- LeBron doesn’t play for the Cavaliers anymore and Dan Gilbert needs to chase the losses associated with having 7th highest payroll and the 3rd worst record in the NBA (data accurate at time of posting).
See ya later.