RNY is what the wholesale originator is getting for loans that can be sold, underwritten by their guidelines, delivered in that time frame.
There are risks and costs before it gets to that stage. It’s a complicated process. These are NOT retail rates for individual loans.
What you are asking is why can’t a retail customer get a true wholesale price.
In the normal course of any business, every item that anybody buys in life is being sold to them at a profit. With a mortgage you are just buying money. The cost of the product doesn’t reflect all the other costs of being in business.
You might see the wholesale cost of an item but that doesn’t reflect the net profit to the business.
There are loads of expenses in running any business over and above the wholesale cost of the product. Lots of businesses lose money even with a margin on the product.
The costs of doing business and fallout are huge, and it’s a business that is difficult to manage.
When someone locks a 30 day lock at today’s rate, until the loan is funded, it’s not a closed loan. There is nothing to deliver. Then it has to go through channels before it can be sold. There can be penalties for not delivering what was committed to.
There are commitments and lots of people along the way that get paid to do their jobs.
My cost of money was 4.75% at the end of the day, that’s 27 basis points over what you mention.
On a $400K loan that is $1080 GROSS profit to the lender (not NET profit)
I don’t know of any other business that sells something for $400,000 and only makes $1080 gross.
Most mtg people have higher rates and have larger profits margins.
Not everyone qualifies for the best rates. .HLS
