Payment Structure for MLOs

Mortgage Loan Officers make their money through lo

Mortgage Loan Officers make their money through loan origination fees, closing costs, and servicing and selling loans. Most often, a Mortgage Loan Officer’s salary is based on commission, with compensation varying from office to office and state to state. This fee is built into the mortgage interest rate as a percentage of the loan amount. With a higher interest rate, MLOs can expect higher compensation and vice versa. Their pay also depends on the number of loans they originate and the percentage of commission they’ve negotiated.

Some Mortgage Loan Officers are paid on commission only, which is common for smaller, state-licensed Mortgage Brokers. If an MLO is hired by a bank or larger financial institution, they are often given a base salary as well as commission and benefits. Some brokerages have a limit on the dollar amount an MLO can make from a single loan, and this figure can be negotiated alongside the commission fee.

Mortgage Loan Officers are either paid “on the front” or “on the back” of the loan. When an MLO is paid “on the front”, the borrower is charged certain fees, such as settlement costs, and that money is given to the MLO. These fees are paid by the borrower either out of pocket or are incorporated into the loan. This payment structure is also called borrower-paid compensation. If MLOs are making money “on the back”, otherwise known as lender-paid compensation, then their commission comes from the bank that is selling the loan to the borrower. This charge is not seen by the borrower. When an MLO is paid “on the back”, they may market themselves and their loans as having “no out-of-pocket fees” or “no-fees”. The Mortgage Loan Officer is still making money, but it is charged on the back-end of the transaction. It’s important to note that an MLO is either paid by the lender or the borrower, but never both.

The typical MLO is paid 1% of the loan amount in commission. On a $500,000 loan, a commission of $5,000 is paid to the brokerage, and the MLO will receive the percentage they have negotiated. If the portion of the commission for the MLO is 80%, they will receive $4,000 of the $5,000 brokerage percentage fee. Depending on the MLO’s involvement in the transaction, the percentage fee can range anywhere from 20-80%.

Whether you’re a commission-based or salaried MLO, you’ll find that more experience and education will land you a higher income. So, what is the earning potential of a Mortgage Loan Officer?

Do you need a license to be a commercial mortgage broker?

In fact, you do not need a commercial license to become a commercial mortgage broker in many cases. Most states do not require commercial licensure, but 20 states require a license. … Example: In California, commercial mortgage brokers must take at least eight college courses in real estate and/or finance.


What Is the Mortgage Brokers Commission? And How Do I Find It?

So you’re applying for a home loan and want to know the mortgage broker’s fee. I don’t blame you, it’s important stuff.

But if the interest rate and combination of closing costs are favorable relative to other banks/lenders/brokers, it doesn’t really matter what they make.

Still, you should know and you have a right to know. Here’s how to find out.

When signing loan disclosures early on in the process, look out for a “Loan Brokerage Agreement” form that spells out their commission, and whether it’s borrower- or lender-paid.

The screenshot above is an example where a broker earned $8,775 via the lender for facilitating the loan. Not bad for one loan, eh?

To figure out how much they’re making on a percentage basis, simply take the compensation amount and divide it by the loan amount.

The loan amount in this example is $780,000, making their compensation 1.125%. It’s reasonable as they could charge 2% or more depending on the wholesale lender they partner with.

You can also find the broker fee on the Closing Disclosure (CD) and the ALTA Settlement Statement when it’s time to sign docs and close your loan.

Is Commercial Lending a good career?

A lot of people make a career out of commercial banking with a good work-life balance. If you’re looking to move on, you may move into corporate banking (similar to commercial banking but with larger clients who are often public), investment management, or private lending.

Education Requirements

Loan originators usually hold a bachelors degree and have a strong understanding of business accounting and finance. The BLS does note, however, that individuals who don’t have a four-year degree may still be able to become loan officers if they have work experience in banking, customer service or sales. Mortgage officers must also obtain a license to practice. The licensing process requires 20 hours of coursework, passing a licensing exam and submitting to a criminal background check.

Compensation for mortgage officers can be based on commission, salary, or a combination of the two. BLS statistics show that, as of May 2017, the median average salary for mortgage loan originators was $64,660. This means that 50 percent of loan officers made more than this amount and the other half made less. The bottom 10 percent of earners made less than $32,670 annually and the top 10 percent earned more than $135,590.


According to the BLS, loan officers typically work from offices, either in bank branches or other professional facilities. However, they may have to commute regularly to meet with clients elsewhere. Most work full-time.

How can I find a mortgage broker?

To find a mortgage broker, it’s usually best to ask for recommendations, such as from a local real estate agent, lawyer, accountant, or neighbor who has recently used a broker. You can also find lists of brokers online.

Loan Closing Fees

  1. Lenders charge fees to the borrower at closing. The loan origination fee, underwriting fee, processing fee, application fee and loan lock fee are all examples of fees that go directly to the lender. Some, like the origination fee, go to pay the loan officer for her work. Others are “junk fees” that have no legitimate purpose and are pure profit. Each lender charges different fees, spelled out upfront in the Good Faith Estimate.

6. How to Choose a Mortgage Lender: 14 Questions to Ask

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How Much Does a Mortgage Broker Make? The average salary for a mortgage broker in the United States can be anything from $50,000 to $90,000, depending on the (18)

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Jul 19, 2021 — That way, you don’t make an offer on a house that your income doesn’t support. 2. How often do you get paid? Are you paid every week, every two (20)

How To Negotiate The Best Mortgage Rate

When you shop for a home loan, compare offers from different competing lenders. There isn’t usually much to be gained by working over an individual loan officer and trying to beat a better deal out of him or her.

However, lenders are rarely allowed to reduce your fees slightly (“deviate,” as they say in the industry) under certain conditions. They may be allowed to do so in order to compete with another lender’s pricing, if they have a policy in place that meets guidelines established by the Consumer Financial Protection Bureau.

Second, any discount can’t be taken from the loan officer commission, except “to defray certain unexpected increases in estimated settlement costs.”

Fortunately, these days it’s easy to get a fistful of quotes online without putting on your boxing gloves.

Loan Officer Income

According to the US Bureau of Labor Statistics (BLS), the median pay in 2015 for loan officers of all kinds — commercial, consumer, and mortgage — was $63,430 per year. The lowest ten percent earned less than $32,870, and the highest ten percent earned more than $130,630.

Loan agent compensation varies widely. Some receive a flat salary, but most are paid on commission. The poll results below from Inside Mortgage Finance show the range of commissions paid. Each basis point is 1/100th of one percent, so 25 basis points, or bps, equals 1/4 of one percent. That’s $250 for a $100,000 mortgage.

How do you become a mortgage broker?

How do you become a mortgage broker?

Employers typically expect mortgage brokers to have a bachelor's degree, a current license and on-the-job training.

To become a mortgage broker, follow these steps:

  1. Earn a bachelor's degree.

  2. Take a pre-licensure class.

  3. Pass the licensing exam.

  4. Customize your resume.

  5. Complete on-the-job training.

  6. Cultivate important skills.

  7. Build a strong network.

1. Earn a bachelor's degree

First, complete an undergraduate program at an accredited university. Consider choosing a course of study that teaches you the fundamentals needed as a mortgage broker, such as finance, economics or accounting. Pursuing a major like business or real estate can also help you master the basics of this industry.

2. Take a pre-licensure class

Next, enroll in the pre-licensure program that all aspiring mortgage brokers must complete before looking for a job. This standard program includes 20 hours of classroom instruction that covers topics like mortgage origination, ethical issues for mortgage brokers and federal and state regulations. The National Mortgage Licensure System oversees pre-licensure programs for mortgage brokers.

3. Pass the licensing exam

After completing the pre-licensure program, take the licensing exam, which is administered by the National Mortgage Licensure System. The exam is available at any time throughout the year and includes questions for national and state test-takers. You need a passing score on the exam and successful background and credit checks to earn your Mortgage Loan Originator license. Check with your state's licensing board to find out if you have to meet any additional requirements to work in your area.

Since you must have a current license to work as a mortgage broker, you have to renew regularly. Most MLO licenses last for one year.

4. Customize your resume

To apply for mortgage broker jobs, you need a resume that reflects your education, related experience and MLO license. In your resume, list relevant coursework and honors, as well as the date of your MLO license and where you earned it.

Related: How to Make a Resume (With Examples)

5. Complete on-the-job training

Once you have an MLO license, you can start out in an entry-level mortgage broker job. When you first begin, you may have to complete a training program. Most mortgage broker training programs last for a few weeks and are designed to teach new hires about internal processes and workflows.

6. Cultivate important skills

As you gain experience as a mortgage broker, take every opportunity to cultivate the skills you need to succeed in this industry. For example, you need excellent interpersonal skills to build relationships with lenders and real estate agents, and you should have strong decision-making skills to work smoothly with clients.

To learn technical skills and new mortgage rules, you can take continuing education classes throughout your career. As a mortgage broker, you are required to take a certain number of course hours to renew your license each year.

7. Build a strong network

You should also take every opportunity to build strong relationships with real estate agents so you can continue to get clients regularly. You can meet real estate agents by attending networking events in your area.


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