Top 10 HOW DO MORTGAGE LOAN OFFICERS GET PAID? Answers

Top 10 HOW DO MORTGAGE LOAN OFFICERS GET PAID? Answers

If your loan officer works for a mortgage bank or mortgage broker

For loan officers who work at mortgage banks (also sometimes referred to as “correspondent lenders”) or mortgage brokers, the vast majority of them are paid on straight commission. There are probably almost as many different loan officer compensation plans as there are lenders — but it is probably generally safe to categorize the pay of this group of loan officers as a “percentage of total revenue generated on a file”.

Or, simply put – if a loan officer helps you with your mortgage and the total fees and yield spread premium add up to be $4,000 and the loan officer is on a “80% split” the loan officer stands to make 80% of $4,000 or $3,200.

The advantage to working with a loan officer who works at a mortgage bank/broker is that they have access to many different lenders and are usually not required to only sell one lenders products. Another advantage to working with a loan officer who works at a mortgage bank/broker is that they have much more flexibility on the amount of fees that you are charged.

So it seems that logically, if on average, these loan officers probably work with 10-20 lenders on a regular basis this means that they can find you the lowest rate with the lowest fees, right?

Maybe.

One disadvantage to working with loan officers at these mortgage bankers/brokers is that no matter what, they must “originate at a profit” or make money from the origination process in order to stay in business.

8. Average Pay For Mortgage Loan Officer

The average smaller mortgage pays compensation plans would create Aims to waive loan officers make six-figure right after six months of training. Meet.(24)

The average salary for a Mortgage Loan Officer is $49097. Visit PayScale to research mortgage loan officer salaries by city, experience, skill, employer and (25)

Their employers often do not pay them on an hourly basis, If you’re a mortgage loan officer who is not being paid overtime in Connecticut, (26)

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Loan Officer Educational Requirements

  • Depending on where you work you may need to be licensed
  • It may easier to get started at a big bank than a smaller mortgage shop
  • You’ll likely also have to pass a background check and get fingerprinted
  • And potentially complete continuing education

Interestingly, you can become a loan officer with no experience. Yep, it’s a potentially high-paying job that also welcomes newbies.

In fact, mortgage loan officers don’t even need a bachelors degree, let alone a high school diploma to gain employment with certain brokers and mortgage lenders.

With the larger financial institutions, a college degree will likely be obligatory without notable sales experience.

In terms of licensing, it depends on the state, company, and specific position. These days, many loan officers need to be licensed, though there are still many positions at large retail banks that don’t require an MLO license.

However, most MLOs need to be registered, perform a background check, and get fingerprinted. This is to protect the public from unscrupulous individuals working for mortgage companies.

If you do need to be licensed, it’s not the end of the world. In most cases, you simply need to take 20 hours of pre-licensure education, pass a test, and complete eight hours of continuing education annually.

The takeaway is that it might be easier to get a job at a retail bank, but these loan officers may be less knowledgeable as a result, and they could be lower paying jobs.

Of course, they may also be the ones that tend to work in call centers and simply plug in numbers into a loan application, as opposed to coming up with creative loan solutions. So they may not need to know very much.

Years of Experience

As you gain experience as a loan officer, you’ll probably also gain more clients. As you gain more clients, you’ll see more money from commissions. Here’s a look at some average salaries you can expect based on your years of experience.

  • Less than 5 years: $40,000
  • 5 to 10 years: $46,000
  • 10 to 20 years: $49,000
  • More than 20 years: $50,000

Loan officers also have the opportunity to move to companies that pay higher commissions as they gain experience.

Do loan officers make a commission?

The income of a loan officer depends largely on whether their employer pays a flat salary or has a commission-based structure in place. As a sales-based role, the general rule is that you can make more commissions in situations in which you're generating your own leads. The difference can range from 0.2% to 2% of the total loan amount, again depending on the employer. Additionally, loan officers can earn incentives for reaching certain thresholds or selling certain products.

Average commission: $24,000 per year

Related: Learn About Being a Loan Officer

Loan Officer Benefits

Most full-time loan officers receive standard benefits like health, vacation, and access to retirement accounts. Most loan officers work for a bank or private company, so the benefits vary depending on their employer.

6. Loan Officers : Occupational Outlook Handbook Bureau of

Some loan officers are paid a flat salary; others are paid on commission. Those on commission usually are paid a base salary plus a commission for the loans (17)

Jul 27, 2020 — Just how are mortgage loan officers compensated? Loan officers usually do not get paid if a prospective borrower decides not to buy or (18)

Feb 3, 2021 — How does a mortgage broker get paid? Mortgage broker commissions or fees are usually paid by the lender after the loan has closed, so working (19)

How much do Mortgage Loan Officer jobs pay a month? The average monthly pay for a Mortgage Loan Officer Job in the US is $6146 a month.(20)

2. The best tools for the job

While technology has made financial services more efficient overall, mortgage banks in particular haven’t kept pace. What other reason could there be why so many lenders rely on physical paper and fax machines to share information?

Using antiquated tools is not only slow and annoying, it’s also a failure to use the best tools for the job. Making even a single loan involves handling huge amounts of data, performing complex calculations, and validating thousands of rules. Compared to human loan officers, computers are orders of magnitude faster, more accurate, and more efficient at doing these things.

A 2013 Oxford economic study of jobs susceptible to automation determined that the traditional role played by loan officers has a 98% likelihood of being replaced by computers.1

We don’t fully agree that loan officer jobs should be automated. We believe:

  • Computer systems should do the calculations.
  • Borrowers should have direct, transparent access to these systems.
  • Human loan officers should be available to offer support and expert guidance to borrowers — provided they aren’t being paid commission that skews their interests.
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How to Be a Top Producing Loan Officer

  • It’s simple really and there’s no secret formula
  • Work hard and close as many loans as possible
  • You can accomplish this by solid networking and putting in the time
  • There’s nothing magical about it, just strong work ethic

While there might be gimmicks and top 10 lists and classes that teach you “how to sell,” it really comes down to hustling. Honestly.

If you’re committed to the business, you can be really successful and earn a ton of money. When I worked for a wholesale lender, there were Account Executives who sat around and complained, and others who just put their heads down and dialed the phone.

That latter group made a lot of money, while the complainers made average salaries and eventually quit. Ultimately, it’s about work ethic and drive.

All the other stuff, like education and the art of selling, will come with experience. You can’t teach someone how to sell in a class, nor can you teach them everything about mortgages in a day or a week.

It takes time and real-life experience to master those things. But without motivation and hard work, it will mean very little.

So if you want to be successful as a loan officer, you need to work hard and network. Don’t be shy, make calls, visit real estate offices and link up with real estate brokers, and eventually it will get easier and easier.

Sure, you might have some nervous calls and meetings early on, but once you gain confidence, it’ll become second nature and pay dividends.

What Are the Highest Paying Cities in the U.S. for Loan Officers?

According to data from ZipRecruiter, the three top-paying cities in the U.S. for loan officers are San Jose, CA, Oakland, CA, and Tanaina, AK.

Mortgage Loan Officer Earning Potential

Your earning potential as a Mortgage Loan Officer can increase as you gain experience and develop your career with additional education. Other factors that will impact your earnings as an MLO include the state in which you do business and the fluctuation of the mortgage market. A whopping 36% of full-time MLOs make above the national average salary, earning up to $181,000 per year. 

With unlimited earning potential and the chance to gain experience and education as you go, becoming a Mortgage Loan Officer can unlock a lucrative and stable career path.

Required Education

Most loan officers need a bachelor’s degree, usually in the field of business or finance. You may be able to become a loan officer without a bachelor’s degree, but you need to have related work experience in sales, customer service or banking.

Mortgage loan officers must have a Mortgage Loan Originator license. This license requires at least 20 hours of coursework, a passing grade on the exam and a background and credit check. You must renew your license every year. Individual states may also have additional requirements.

A number of schools and banking associations offer courses, training programs or training certifications for loan officers. Outside of mortgage loan officers, certification isn’t required, but it shows that you know what you’re talking about when it comes to the job, which may lead to better employment opportunities.

The median annual wage for loan officers is $63,650 according to the United States Department of Labor. The median wage means half the loan officers make less than this amount and half make more.

Loan officers for automobile dealers had the highest compensation with an annual median wage of $85,140, followed by loan officers who work in management of companies and enterprises with a median annual salary of $68,340.

A loan officer’s income depends on their employer. Some are paid a flat salary, while others are paid a base salary plus commission. The amount of your commission depends on the company where you work.

One survey showed that 45 percent of firms paid between 76 basis points to 150 basis points commission on each loan. Each basis point is 1/100th of one percent, so 76 basis points are just over ¾ of one percent. This means on a $100,000 loan, a loan officer would make around $760 commission.

Generally, the more work you have to do to generate clients on your own, the higher your commission. For example, someone who works for a small company with little support may get 1-to-2 percent of the loan amount. Someone else who works for a large company and is given a list of clients to contact might make 20-to-30 basis points or .2-to-.3 percent of the loan amount.

5. You can do better

We’ve established four reasons why it’s bulls#!t for you to get stuck with higher rates and origination fees to effectively pay for loan officer commission. But the very best reason is — you don’t have to.

You can choose to work with Better Mortgage. We have industry-leading rates. We don’t charge origination fees. And our loan officers don’t get paid commission, ever.

As a Better Mortgage borrower, you can complete your entire digital mortgage process online. You have direct access to our systems, which:

  • Match you to the largest mortgage end investors in the world (including Fannie Mae).
  • Find the best mortgage at the lowest rate for your specific situation.
  • Guide you through the application process with 100% transparency.

Our loan officers are here to support you with any questions or concerns you may have (which is what humans are actually good at). But they don’t get paid commission. You deserve better than that.

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  1. Frey, Carl Benedikt and Osborne, Michael A. (2013), “The Future of Employment: How Susceptible Are Jobs to Computerisation?”

  2. Philippon, Thomas, “Finance vs. Wal-Mart: Why are Financial Services so Expensive?”

  3. Bogle, John (2016), “The Index Mutual Fund: 40 Years of Growth, Change, and Challenge”

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