[Aop] Andrew Vaughey, How Much Does A Mortgage Broker Usually Make Off Of A Mortgage Loan?

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Andrew Vaughey, How Much Does A Mortgage Broker Usually Make Off Of A
Mortgage Loan?



Since compensation methods for mortgage brokers are not regulated by any
government entity, it is important to note that brokers can charge whatever
they want to for their services. Of course, since the number of brokers in
the residential real estate market has steadily increased to the point where
it is impossible to count how many there are, a number of industry standards
have formed and become unofficial guidelines for how and what brokers will
charge.

Who Pays The Brokers? Mortgage brokers get paid from multiple sources, and
the most notable and substantial are the borrower and the lender. Since the
broker?s responsibility is to act as liaison and intermediary between the
lender and the borrower, he is entitled to payment for such services. The
borrower will pay the broker for assisting with completion and submission of
the loan application paperwork, negotiating the best possible rates and
contract provisions with the lenders, and acting as an independent resource
for any and all questions or concerns. The lender will also pay the broker
for assisting the borrower with paperwork, fielding all questions and
concerns, and for negotiating with the borrower.

The borrower will pay the broker with cash for the loan application
paperwork, and then points for other services rendered, an amount which will
be satisfied at settlement and added to closing costs. The lender will pay
the broker in the form of a flat commission for bringing new clients to that
organization, plus something called a Yield Spread Premium, which is the
difference between the lender?s required interest rate and the one the
broker convinced the borrower to accept.

Points Paid to Broker A point is equal to 1% of the total loan amount, and
different brokers will charge different amounts of points, usually based on
the complexity of your loan. It is very important to note that these points
charged by brokers for their services are different from points paid
directly to the lender in exchange for a lower interest rate (called
Discount Points).

It is not difficult to see how working with mortgage brokers can present
some significant expenses and additional concerns about the cost and quality
of a loan. Brokers currently account for the largest majority of residential
mortgage applications, and present buyers with an option that is very
attractive, provided of course that the broker and his agency are reputable
and experienced.

  - We maintain a list of reputable mortgage companies on the internet,
which is updated frequently.
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