The average loan officer usually makes a 40%-90% commission with no salary or hourly rate. The difference in commissions is usually based on experience and whether or not leads and/or advertising are provided by the mortgage company.
The parts of the loan that are generally considered for the loan officers commission split are:
- Origination fee – This fee is usually between 0.5 and 2 percent of the total loan amount.
- Discount fee/Points – This fee is rarely used in this day and age, but was primarily charged if the consumer wanted to buy their interest rate down, although surely some consumers have been charged for no other reason then profit.
- Yield Spread Premium – YSP is the bread and butter of the industry. This 3 letter abbreviation is responsible for more profit to mortgage companies then the previous two combined.
Loan Officer makes: $2400-$5400
If your mortgage loan is $300,000 with a 1% origination fee and a YSP of 1%, your loan officer is more then likely making between $2400 and $5400 (40%-90% of origination and YSP) off your loan.
Loan Officer Makes: $12000-$27000
On a $1,000,000 loan with 0.5% origination and 2.5% YSP your looking at the loan officer making between $12000 and $27000 (40%-90% of origination and YSP) off your loan!
What is an estimate of closing cost?
A good estimate of closing cost is 1% and 3% of the total loan amount. The secret to keeping those fees as low as possible is to arm yourself with the information needed to make confident and intelligent decisions and to keep a close eye on your credit report.
You can ask all the right question about your mortgage loan, but if you have no idea what the right answers should be, you’re only going to make it easy for dishonest loan officers to take advantage of you.