How do Mortgage loan officer breed their money?
I'm getting a mortgage loan through a mortgage company but the guy that is giving me the loan seems a bit bit to excited. How much money is he making off of the loan of 170,000 and what should I look out for?
Answers:
Lenders price loans at diverse levels. Par is the interest rate with the borrower paying no discount points to lessen the rate and no yield spread premium is being compensated to the loan officer for locking the borrower at a higher rate than par.
Locking at higher than par is not other detrimental to the borrower as the loan officer can use the yield spread premium to pay some of the borrower's closing costs but nearby are loan officers who will quote and lock a borrower at a higher rate surrounded by 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 next to 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 inspired 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 in general see until you get your HUD 1 closing statement. I would suggest you ask the title company for a copy of the HUD 1 prior to signing so that you may examine the disbursement breakdown on page 2. If you find he is getting yield spread premium that you quality is excessive for the work performed you can go backbone to him and demand he renegotiate the lock to the rate that was par on the morning you locked. You may have to pay a re-draw payment on the documents so evaluate the savings. Most lenders will agree to that since it represents no loss to them.
Let me know if you need assistance reviewing the HUD 1.
Now, I'm not saw there is anything wrong with a loan officer individual compensated via some yield spread premium. On some days there really isn't a rate quoted at par, near may be a bit, but not a lot, of yield spread and some loans bring more work than others. People deserve to be fairly compensated for their time and service. But loan officers who conciously jack up a rate on a borrower and misrepresent it as par or who simply jack it up on a simple loan to bring more money are ethically challenged and need their hand slapped. Source(s): 20+ years as a direct mortgage lender
The loan origination fee, processing fee and discount points. You should enjoy been given what is called a Good Faith Estimate (GFE). This should make clear to you what he is charging you to do the loan. The loan officer doesn't get all that money. The broker usually receive 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 adjectives 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 tax unless you pay for the appraisal with your own check.
We are on commission only. He is making 1% on the front which is the origination which equals 1700, if he is not making any money in the rate (on the back) more than potential he will make more money on the front (in the origination fee) Source(s): I am a loan officer and we all hold to make a living.
by charging commissions and fees
Simply put the loan officer will get salaried either three ways:
1. You pay him origination points
2. The lender will compensate him
3. A combination of 1 and 2
For anyone to come here and tell you that only one or two ways is the right route or how much of % should be paid is completely wrong.
Each state is different on how much on an average a borrower will pay on origination points.
In instruct for you to find out how the loan officer is chargin your, look at the Good Faith Estimate.
If you are paying for origination points up front, you may be getting a better rate than having the lender pay the loan officer for his commission. Although you could be getting charge at both ends.
Look accommodatingly at the Good Faith Estimate. Source(s): www.JRealEstate.blogspot.com
Either on an origination fee --which in general is around 1%.
Or from the bank they are using to get your loan.
Our mortgage broker waive all upfront fees and was getting remunerated only from the bank that be supplying our mortgage.
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Answers:
Lenders price loans at diverse levels. Par is the interest rate with the borrower paying no discount points to lessen the rate and no yield spread premium is being compensated to the loan officer for locking the borrower at a higher rate than par.
Locking at higher than par is not other detrimental to the borrower as the loan officer can use the yield spread premium to pay some of the borrower's closing costs but nearby are loan officers who will quote and lock a borrower at a higher rate surrounded by 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 next to 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 inspired 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 in general see until you get your HUD 1 closing statement. I would suggest you ask the title company for a copy of the HUD 1 prior to signing so that you may examine the disbursement breakdown on page 2. If you find he is getting yield spread premium that you quality is excessive for the work performed you can go backbone to him and demand he renegotiate the lock to the rate that was par on the morning you locked. You may have to pay a re-draw payment on the documents so evaluate the savings. Most lenders will agree to that since it represents no loss to them.
Let me know if you need assistance reviewing the HUD 1.
Now, I'm not saw there is anything wrong with a loan officer individual compensated via some yield spread premium. On some days there really isn't a rate quoted at par, near may be a bit, but not a lot, of yield spread and some loans bring more work than others. People deserve to be fairly compensated for their time and service. But loan officers who conciously jack up a rate on a borrower and misrepresent it as par or who simply jack it up on a simple loan to bring more money are ethically challenged and need their hand slapped. Source(s): 20+ years as a direct mortgage lender
The loan origination fee, processing fee and discount points. You should enjoy been given what is called a Good Faith Estimate (GFE). This should make clear to you what he is charging you to do the loan. The loan officer doesn't get all that money. The broker usually receive 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 adjectives 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 tax unless you pay for the appraisal with your own check.
We are on commission only. He is making 1% on the front which is the origination which equals 1700, if he is not making any money in the rate (on the back) more than potential he will make more money on the front (in the origination fee) Source(s): I am a loan officer and we all hold to make a living.
by charging commissions and fees
Simply put the loan officer will get salaried either three ways:
1. You pay him origination points
2. The lender will compensate him
3. A combination of 1 and 2
For anyone to come here and tell you that only one or two ways is the right route or how much of % should be paid is completely wrong.
Each state is different on how much on an average a borrower will pay on origination points.
In instruct for you to find out how the loan officer is chargin your, look at the Good Faith Estimate.
If you are paying for origination points up front, you may be getting a better rate than having the lender pay the loan officer for his commission. Although you could be getting charge at both ends.
Look accommodatingly at the Good Faith Estimate. Source(s): www.JRealEstate.blogspot.com
Either on an origination fee --which in general is around 1%.
Or from the bank they are using to get your loan.
Our mortgage broker waive all upfront fees and was getting remunerated only from the bank that be supplying our mortgage.
Related Questions: