BiggieFries Posted August 25, 2008 Share Posted August 25, 2008 My wife and I are about to close on our new house this Friday and the subject of interest rates and how they fluctuate (almost hourly) came up. I shopped around a bit with a couple of banks (not brokers) and 2 brokers. We ended up going with someone my FIL's friend uses for his real estate deals as my FIL's friend knows and trusts this guy. We started wondering how a broker gets his cut. Is it straight commission from the eventual lender? Does he have some kind of service fee that he charges either me, the lender or both? Does the interest rate have any baring on it (ie. if I can get this guy to lock in at a slightly higher int rate my cut will go up)? Also, who's court is the broker mostly in (other than his own obviously)? Is the broker actually taking your "best interest" at heart, is he taking the lender's side so that he has an "in" at the bank, or is he trying to screw everyone for the biggest percentage/cut? Quote Link to comment Share on other sites More sharing options...
dmarc117 Posted August 25, 2008 Share Posted August 25, 2008 not a broker but found this....... Mortgage brokers typically make money through one or a combination of the following: 1. A standard fee paid directly by the borrower from the borrowers' funds. 2. A "yield spread premium" or "rebate" paid to the broker by the lender. This requires the borrower to accept a slightly higher interest rate to compensate for the cost to the lender. This rebate may be capped at a certain percentage, usually 3%, of the loan amount and may be accompanied by a prepayment penalty to ensure the cost recovery to the lender. Current mortgage market conditions may prevent some borrowers to qualify for a rebate. 3. In a refinance loan, the borrower may be qualified for a loan in excess of the amount required to pay the existing lender. This excess may be used to compensate the mortgage broker. Quote Link to comment Share on other sites More sharing options...
Missoula Griz Posted August 25, 2008 Share Posted August 25, 2008 It depends on monthly volume. In my case, if I close 1 million in a month my cut is 50% of the net balance on the loan. Quote Link to comment Share on other sites More sharing options...
muck Posted August 25, 2008 Share Posted August 25, 2008 It depends on monthly volume. In my case, if I close 1 million in a month my cut is 50% of the net balance on the loan. So, you make $500,000 / month? Quote Link to comment Share on other sites More sharing options...
MrTed46 Posted August 25, 2008 Share Posted August 25, 2008 It depends on monthly volume. In my case, if I close 1 million in a month my cut is 50% of the net balance on the loan. Can you define net balance? Quote Link to comment Share on other sites More sharing options...
dmarc117 Posted August 25, 2008 Share Posted August 25, 2008 So, you make $500,000 / month? Can you define net balance? +1 please do. cause i may need to get my resume dusted off Quote Link to comment Share on other sites More sharing options...
Missoula Griz Posted August 25, 2008 Share Posted August 25, 2008 Can you define net balance? For example, on a 400,000 loan where I charge 1/2% origination and receive a 1% srp the gross revenue would be $6000. Lets say our home office takes $1200 for underwriting, IT, closer fee and other misc. costs. The net balance would be $4800. I get $2400 gross. Quote Link to comment Share on other sites More sharing options...
Ramhock Posted August 25, 2008 Share Posted August 25, 2008 For example, on a 400,000 loan where I charge 1/2% origination and receive a 1% srp the gross revenue would be $6000. Lets say our home office takes $1200 for underwriting, IT, closer fee and other misc. costs. The net balance would be $4800. I get $2400 gross. Until they rescind, then you get $0. Quote Link to comment Share on other sites More sharing options...
Missoula Griz Posted August 26, 2008 Share Posted August 26, 2008 Until they rescind, then you get $0. I have been in the business for 18 years. Only once did it happen Quote Link to comment Share on other sites More sharing options...
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