Introduction
A mortgage broker is an intermediary between a borrower and a lender, typically working with multiple lenders to secure the best loan for their clients. The broker’s primary role is to help the borrower find the right loan, and to make sure it is set up and processed according to the lender’s requirements. The broker’s compensation is based on the type of loan they arrange, the amount of the loan, and the terms of the loan.
How Does a Mortgage Broker Make His Money?
A mortgage broker’s income is typically based on commission. Commission is paid by the lender to the broker after the borrower’s loan is closed. The amount of commission is typically based on the amount of the loan, the term of the loan and the type of loan. The amount of commission a broker earns can vary greatly, ranging from 0.5% to more than 2% of the loan amount.
In addition to earning a commission, some mortgage brokers may charge fees for services such as obtaining a credit report, appraisals, and document preparation. These fees are typically passed along to the borrower and are included in the closing costs.
Can a Mortgage Broker Make a Million a Year?
The answer to this question depends on the amount of loan activity the broker is responsible for. A mortgage broker may be able to make a million a year if they are able to close a high volume of loans. Brokers who specialize in high-end loans, such as jumbo loans, may also be able to make a million a year as these types of loans typically pay a higher commission than traditional loans.
In addition to commission, a broker may also be able to increase their income by offering additional services such as helping borrowers with the mortgage application process, loan structuring, and providing financial advice.