Question by Sunny Michael: How much can a loan agent make when refinancing a loan?
I live in California, and I just refinance my mortgage. I found out that the mortgage processing company made about 1.2% commission of the loan amount. How much can a loan agent make? If the loan is $ 1 million, the agent could make $ 10k for just one loan. Is it the case?
Answer by star
yes and sometimes they make more then that
What do you think? Answer below!
It really depends. Some states limit the amounts a mortgage company can charge on your loan, say 2% of the amount financed. On a 1st mortgage in standar 3rd party fees, you are looking to pay approx $ 4000-5000 in fees for everything from pre-paid interest, title, escrow, reserves, underwriting, processing, etc. You would have to look at the Good Faith Estimate or have a lawyer look at it to really tell if you were over charged. Please feel free to contact me with any questions or concerns, or if I can be of further help: JessicaStephens@banncor.com. Best of luck.
The limit varies from state to state. In California, it’s 6% of the loan amount. I know of places that make 3 to 5 percent on every loan from people who don’t think they have a choice. Some states do not have limits. 1.2 percent is not bad. I average a little less than 1 percent total compensation, and I’m way below most of the market.
Of course, judging the loan by how much the loan company makes (or has to disclose – direct lenders don’t have to disclose what they make while brokers do) is a good way to end up with a bad loan. Judge the loan by the loan the competition could have delivered to you. If one loan is a thirty year fixed at 6.5% with no points, that’s a better loan than 6.75% with one point. Doesn’t matter what the loan company made – you get a better deal with the first loan.
he can make as high as 3%.sounds awful don’t it
Yes. In addition to what you pay there is a rebate that is paid by the lender. Most brokers will also collect here as well. It would be listed on the Final HUD. This will show every dime and the actual costs for evetything. The GFE is an estimate.
Lets also remember that a real estate agent earns 3%. Are they any more entitled to those earnings than the person in charge of the financing? The fact is that both are middle men between you and the sources but you need them because they can save you in many ways if they are good.
I write a blog on the subject of credit management, mortgages, real estate trends, etc. Check it out for more information that may be helpful.
Yes, but let’s keep in mind the Loan Officer does not get all of that money. Different lenders have different commission structures for their LOs. So one LO may make the bulk of that amount and another will see a very small slice of the pie – just as for realtors. And it balances out to a large degree. The LOs that make more money due to a higher commission split do so because their company does less for them in way of marketing. marketing and everything comes out of that LO’s pocket. It can be a lucrative business, but it’s a lot of work and there are no guarantees…people shop their loans around, deals fall apart and so on.