How Does A Mortgage Broker Get Paid?

Introduction

Presenter: Matt from Speak Straight Mortgage

Purpose: To explain how he gets paid as a mortgage broker and why he helps clients

Initial Skepticism: Matt shared his initial distrust of commission-based professionals before joining the mortgage industry.

Reason for Video: To clarify how mortgage brokers are paid and to build trust with potential clients.

Two Payment Methods:

From the Lender: A fixed percentage of the loan amount, the most common method.
From the Borrower: Directly from the client, a less common method.

Consistent Compensation: When the lender pays the mortgage broker, the compensation is a fixed percentage of the loan amount.
No Extra Charges: The mortgage broker cannot charge extra based on the borrower’s specifics.
Standard Rate: The payment remains the same percentage regardless of any additional factors, such as charging a higher interest rate.

Consistent Earnings: The broker’s earnings do not increase if they charge the borrower a higher rate.
Transparency: This ensures that the broker’s motivation is aligned with securing the best terms for the borrower, rather than seeking higher personal gain through increased rates.

Misconceptions: Clarifies that mortgage brokers’ compensation is not like car sales, where profit is based on the sale price above cost.

Loan Closure: Brokers are only paid if the loan closes.

Guideline Compliance: Loans must meet specific guidelines set by Fannie Mae, Freddie Mac, and Ginnie Mae.

Borrower: Takes a loan from a financial institution.
Mortgage Broker: Facilitates the loan and ensures it meets guidelines.
Lender: Funds the loan and sells it to Fannie Mae, Freddie Mac, or Ginnie Mae.
Investors: Buy mortgage-backed securities, confident they meet guidelines.

Expertise: Brokers ensure clients meet guidelines to secure loans.

Misconceptions: Matt is not lending his own money; his role is to ensure the loan meets the necessary guidelines.

Analogy: Comparing mortgage applications to job interviews, where brokers prepare clients to present themselves in the best light.

Technical Expertise: Matt emphasizes his knowledge of guidelines over sales skills.

Client Preparation: He helps clients be in the best position to meet loan approval guidelines.

Trust Building: Encourages clients to feel comfortable seeking his help at any stage of the buying process for the best possible terms.