How Much Does a Mortgage Broker Make on an Average Loan

A Home Buying Article Contributed by Robert Scalia

How Much Does a Mortgage Broker Actually Make on a Loan?

In order to better understand the mortgage broker, it is not unreasonable to have an idea of how much money he can make from your mortgage and what stake he has in ensuring that the entire process goes off without a hitch.

A survey taken in 1998 on some 1,000 broker firms around the country discovered that the average income per loan was $2443. That would work out to just over two per cent of an average American home mortgage loan, which worked out to about 120,000 dollars. Keep in mind that his is gross income and therefore doesn't take any of the broker's expenses into account.

The broker income reported in this survey comes from the payment of points by borrowers and and rebates to the brokers as they are provided by lenders.

What are Some of the Factors That Will Affect How Much a Mortgage Broker Makes on a Loan?

There are several factors that will determine how much a mortgage broker makes on any given transaction or loan.

For starters,it is a known fact that mortgage brokers will make more money on large loans than on small ones. For loans of $80,000 and less, an American mortgage broker might average about $1600 per loan. For loans greater than $225,000, a mortgage broker might pull in as much $5453 per loan.

You need to keep in mind that while income in dollars rises with loan size, the actually percentage of the loan a mortgage broker will reap actually decreases as the loan size increases.The higher income on large loans has nothing to do with a greater workload. If anything, smaller loans take more of the broker's time to process than larger loans.

Another important factor is the type of loan. Studies have shown that mortgage brokers will consistently pull in more income per loan with FHA loans than on conventional loans.

One of the main reasons for this, of course, is that FHA loans often require a greater amount of work and processing time. The average processing time on an FHA loan between $80,000 and $110,000 was roughly 21 days, compared to just over twelve days for more conventional loans. It's also no secret that FHA borrowers don't bargain as much as conventional borrowers do, which makes a mortgage broker's job all that much easier.

How Can a Mortgage Broker Go about Increasing His Pay Out?

This is where it gets tricky. Because the business is so competitive, a mortgage broker usually has to pull out all the stops hen it comes to increasing his income.

While this means offering only the best service to their clients and doing their best to et the most competitive rates out there, several mortgage brokers revert to dirty tricks designed to squeeze every last ounce of possible profit from a borrower. Not that you know, be aware that your own ignorance is often a mortgage broker's winning ticket.