🔎 What Are "Margins" (And How They Cost You Thousands)?

When you apply for a mortgage, you assume lenders just give you the best rate available, right?

❌ Wrong.

Behind the scenes, lenders aren’t just handing out rates—they’re marking them up to increase their own profits.

Here’s what happens:

1️⃣ The True Market Rate:

Lenders don’t set mortgage rates. Rates come from the secondary mortgage market (think Fannie Mae, Freddie Mac, and private investors). They dictate the baseline interest rate that lenders can offer.

2️⃣ The Lender’s Margin:

On top of that base rate, the lender adds a margin—a hidden percentage that determines how much extra they make off your loan. This margin is pure profit for them, and it’s the reason you could be paying WAY more than necessary.

🚨 The bigger the margin, the higher your rate, the more money they make.

🧐 The Day I Realized I Was Screwing My Own Clients

When I was running my own mortgage branch at Celebrity Home Loans, my regional manager called me one day with a simple directive:

👉 "Set your FHA margins at 4.25%."

Now, let me translate what that means.

They weren’t telling me to give my clients a 4.25% interest rate (which would have been amazing at the time).

They were telling me to add 4.25% in extra profitability into every single loan.

Here’s how it works in real numbers:

📌 Let’s say the market rate was 5.00%. That’s the baseline rate that Fannie Mae or an investor would fund the loan at.

With a 4.25% margin, my new rate wouldn’t be 5.00%—it would be 6.50% or more!

That extra 1.50%+ difference is pure profit for the lender, costing the borrower tens of thousands of dollars over the life of the loan.

👎 I realized that if I stayed in this system, I was forcing my clients into higher rates just to pad the company’s bottom line.

I had a choice:

✅ Stay and play the game. Keep marking up rates and pretending this was just "how things worked."

✅ Cut out the middlemen. Move to a broker model where I could give my clients direct access to the lowest wholesale rates—without the unnecessary markups.

I chose option 2.

💡 How I Cut Out the Middlemen and Lowered Rates for My Clients

The mortgage industry thrives on complexity. The more confusing it is, the easier it is for lenders to quietly inflate rates without borrowers realizing it.

So I decided to simplify the game by eliminating the middlemen:

🚫 No more corporate branches dictating high margins.

🚫 No more extra markups disguised as "normal" rates.

🚫 No more games where lenders win, and borrowers lose.

Instead, I went full broker mode—meaning I could:

✅ Shop multiple lenders for the actual lowest rate (instead of just selling one company’s inflated rate).

✅ Give my clients the real, wholesale mortgage rate without any extra hidden profit baked in.

✅ Let the free market compete for my clients’ business, instead of forcing them into a pre-set margin.

And guess what happened?

🎯 My clients started getting lower rates than they ever had before.

🎯 I could finally focus on helping clients build real wealth, not just close loans.

🎯 I developed the Wealth Formula, a system designed to help homebuyers create a million dollars in equity with minimal upfront cash.