WHO PAYS A MORTGAGE BROKER?
As a mortgage broker in Kentucky and Ohio I sometimes am asked "Who pays you?" Or "How do you get paid?" I nearly lost an opportunity for a home loan recently because the buyers thought they had to pay me. We had met and discussed their goals and best products for them. They later admitted they were very thankful for the frank discussion and great education about how to proceed but were concerned about their funds. Being first time buyers they were considering the down payment they needed plus what they may need to pay me and did not see how they could get those funds.
Once we straightened out the fact they do not need to pay me we were all elated that we can work together in getting them into a home with the best product and service. You see generally I am paid by the lender. It would not occur to a home buyer to ask a loan officer at a bank or mortgage banker how they get paid. They would assume they are paid by their employer and that would be correct.
In my case as a mortgage broker the lender is not my employer, they don't provide me benefits, pay payroll taxes for me, pay my office rent, etc. With a mortgage broker lenders do get the benefit of having their products in a market they do not occupy physically. As a result I have agreements with mortgage lenders to provide products borrowers need and they pay me for that service. Imagine the savings a company has by not having an office in every single state, that is how they can pay a mortgage broker for services.
Usually the lender pays me, however, as a mortgage broker I have the option for a borrower to pay me. It is not one used often simply because it does not offer a tremendous benefit to the borrower.