How do Mortgage loan officers make their money?

konnor aiden · Joined: 14 Sep 2009 Posts: 18

The loan origination fee, processing fee and discount points. You should have been given what is called a Good Faith Estimate (GFE). This should tell you what he is charging you to do the loan. The loan officer doesn't get all that money. The broker usually receives around 40% of those fees to cover overhead expenses. For $170,000 loan you really should be paying around $2250 for all fees to broker. If you are comfortable with those fees be sure to ask your loan officer to put all the fees into the loan origination line of the closing statement (origination, processing, appraisal, credit report fee). This expense can be amortized on your taxes. If this is separated on the closing statement you can only expense the origination fee unless you pay for the appraisal with your own check.

EricJ · Joined: 09 Jan 2009 Posts: 321 Location: New Jersey

Konnor

That is not entirely accurate. Brokers still make money even if you do not pay origination or discount points.

Roger_Silvester · Joined: 29 Jun 2009 Posts: 51

Depends on the person. Two items that affect their income is volume (number of loans they close) and how aggressively they price their loans. A good loan officer can still make over $100,000 per year. It can be a tough business (just like any competitive commission sales career).

TimtheMortgageGuy · Joined: 16 Jan 2008 Posts: 96 Location: Rosemount, MN

konnor aiden wrote: The loan origination fee, processing fee and discount points. You should have been given what is called a Good Faith Estimate (GFE). This should tell you what he is charging you to do the loan. The loan officer doesn't get all that money. The broker usually receives around 40% of those fees to cover overhead expenses. For $170,000 loan you really should be paying around $2250 for all fees to broker. If you are comfortable with those fees be sure to ask your loan officer to put all the fees into the loan origination line of the closing statement (origination, processing, appraisal, credit report fee). This expense can be amortized on your taxes. If this is separated on the closing statement you can only expense the origination fee unless you pay for the appraisal with your own check.

:roll: :roll: another terrible post on this site. Don't give advice if you don't know what the he77 you are talking about.

EricJ · Joined: 09 Jan 2009 Posts: 321 Location: New Jersey

The worst part of that post was suggesting that "origination" is tax deductible. ....DISCOUNT POINTS !!

Elmira Nancy · Joined: 13 Nov 2009 Posts: 28

Lenders price loans at various levels. Par is the interest rate with the borrower paying no discount points to reduce the rate and no yield spread premium is being paid to the loan officer for locking the borrower at a higher rate than par.

Locking at higher than par is not always detrimental to the borrower as the loan officer can use the yield spread premium to pay some of the borrower's closing costs but there are loan officers who will quote and lock a borrower at a higher rate in order to increase their income on the loan.

Typically, the average loan fee (as compared to discount points) is 1% of the loan amount.

Because you are working with a broker, he is required to disclose any yield spread premium on an updated Good Faith Estimate if he locked your rate at a higher rate than the original rate quoted. If he locked you at the originally quoted rate and the rates dropped between the time of the quote and the lock, he may have picked up some yield spread premium that you would not normally see until you get your HUD 1 closing statement.