Bond Originators Introduction
Bond Originators are what Americans call mortgage brokers. Before there were any bond originators, you had to go through the process of applying for bonds or mortgages with every single bank individually. You had to go to their office during regular hours. This took extra days and hours of trying to shop for loans with rates you could live with. When you hire a bond originator, things work very differently. They will often come to your home, even after normal business hours. They take you through the application just once. No matter how many other lenders they will approach on your behalf. This means that you don’t have to spend hours going through the same loan process over and over again.
Most bond originators will have signed contracts with all of the bigger banks as well as many of the smaller independent banks and a list of kinds of lenders that they have worked with in the past. The thing that is good about this is that when you get the okay from multiple places, you can choose which one you want because by being able to compare rates and terms you can pick the one that offers you the very best terms.
The bond originators do all of the negotiating with all of the lenders in order to get you the best interest rates possible. When all is said and done, the originators can usually get between a 0.5% and 2.5% lower than the current bond rate. Estimates say that the origination industry will save their clients around 5% per year in rate concessions. The lenders all know that they have to be very competitive if they are to get any business. There will be times when the negotiations have been completed, a lender will tell the originator that they will give them an extra percentage discount beyond what the best lender has negotiated. The originator won’t reveal what has been negotiated but will give each of the lenders one final time to bear the best rates or terms that the originator has in hand.
It is also a good thing that irregardless of all the red tape the NCA causes, bond originators somehow manage to take your application through the process of getting approved in just about 1/2 the time it would normally take you if you were approaching the lender or bank directly. So you not only save on rates and get better terms, but you also save time and we all need to save as much time as we can.
In the bad old days, banks could compel their loan customers to use their insurance products (which was very often very expensive). The National Credit Act (referred to as the NCA) put a stop to that practice and your bond originators can now shop and compare rates from several insurance companies. They can insure that you don’t get more coverage than you need and that the coverage that you do need can be gotten at the best rate for your circumstances. This change has saved millions in insurance costs each year.
It is no secret that banks aren’t very enthusiastic about the bond originator industry. They have to give up some of their margin and what they would have earned on insurance as well, when bond originators secure the bond on behalf of their clients.