how do mortgage brokers make their money?

Question

how does their percentage work, is there alot of money in that business. if so is it difficult to get into that business and establish yourself. is it expensive to start a business for this profession

Answer 1

Hi courisousgeorge,

What most consumers do not know about home loans - YSP

Watch the Yield Spread Premium (YSP)

This is what a broker can receive on the back end in conjunction of the Origination fee. This fee is paid from the lender to the broker in lieu of a higher rate..

For example, if 5.25 on a 30 year is a “PAR” rate and 5.50 is a “rebate” of .500, that means that the broker will receive a half of a point (.500) of the TOTAL LOAN VALUE…IE: $200,000.00 loan the “half on the back” rebate would equal $1,000.00

EXAMPLE:
So on the Good Faith Estimate
Loan Value of 200,000.00

Origination fee: 1% = $2,000.00
Yield Spread Premium: = ½% or .500 = $1,000.00
Processing Fee: $495.00
Administration Fee: $295.00

Plus whatever else they may be charging you

Grand Total of: $3,790.00 for your loan with “one on the front and half on the back”, and standard processing and admin.

The thing with rebate or YSP is that there are no tax benefits to you and it affects your rate.

Most lenders will "gloss" over YSP if you ask. I have the philosophy that everyone has the right to know.

As far as starting your own mortgage business, you need has some experience before most states will grant you a license. Two years is typical.


~Trey

Answer 2

Most are paid on the broker or origination fees they charge. Just apply at any firm. You will get hired or not! Yes there is good money in it if leads are provided.

Answer 3

it somewhat is many times considerable to verify apples to applies, and subsequently you're no longer doing that. that is genuine that a broking service can shop between particularly some lenders, on a similar time as the economic business enterprise would not have that flexibility. besides the undeniable fact that, in some situations the economic business enterprise deal is larger and in different situations it can't be. i could advise you bypass lower back to the economic business enterprise and the broking service and ask the two considered one of them to cite you the par fee with each and every of the remaining expenses disclosed one by one. (The economic business enterprise could have already achieved that.) The par fee is extremely like the "wholesale" fee. Get a competent faith estimate for the par fee from the two. then you definately can greater properly study the two promises. right here is what's happening: Your broking service is telling you that the remaining expenses are decrease as a results of fact he's getting paid via the lender. which skill he's "marking up" the linked fee above the par fee and then getting paid interior the direction of the "YSP" or "yield unfold top type" via the economic business enterprise. that is corresponding to a kickback from the lender. that is advantageous in case you are able to no longer take care of to pay for the remaining expenses, besides the undeniable fact that it does mean a greater robust interest fee than what you're able to get via taking the indoors maximum loan "at par" (on the par fee without markup) and paying the remaining expenses straight away. reckoning on how long you carry that own loan, the cost of the better interest fee could outweigh any "mark downs" on remaining expenses. that's the place debtors get misled via no remaining value loans. There are constantly expenses to a private loan, only relies upon on no count in case you notice them beforehand or no longer! as quickly as you get the par costs from the two you are able to constantly run a loose fee seek on line to work out no count if or no longer they are quoting the final par costs or no longer. In my adventure, as quickly as you initiate up inquiring for the par fee and the good faith Estimate at par, it places you in greater of the driving force seat as a savvy shopper. you're able to assume to pay remaining expenses in one way or the different, and you're able to assume to pay for the broking service's time in case you bypass that direction. yet you're able to additionally assume finished disclosure of your thoughts so which you're able to make the final determination.

Answer 4

They usually charge a set fee.