How Much Do Mortgage Brokers Make? (With Duties and FAQs)
Updated December 15, 2022
Mortgage brokers assist people with securing and closing mortgages or home loans. They work as liaisons between borrowers and lenders and work closely with loan officers, underwriters, title companies and real estate agents. If you're interested in a career in the real estate industry, learning how much mortgage brokers make can help you decide whether this career path aligns with your goals.
In this article, we discuss how much mortgage brokers make, describe what they do, explain how to become one and answer common questions about this career path.
How much do mortgage brokers make?
Mortgage brokers earn an average of $93,014 per year, but this figure can vary based on factors such as experience level and geographic location. Their employment type might also affect their overall pay.
While some mortgage brokers work for mortgage brokerage firms and banks, others work as independent contractors. Independent contractors might have less consistent earnings but also have the opportunity to set their own hours.
For the most up-to-date salary information from Indeed, click on the link provided.
What affects a mortgage broker's pay?
Mortgage brokers might earn a base salary, along with a variable commission that depends on the following factors:
The terms of the loan
On average, mortgage brokers charge a commission of 2.25% for each loan. While the loan terms might vary, federal regulations prohibit brokers from charging more than 3% of the total loan amount. For example, a mortgage broker might charge 2.25% of a $500,000 loan, which is $11,250 in commission.
The agreement they have with their client
Brokers can work on behalf of either borrowers or lenders, so their fees depend on the agreement with their clients. Lenders generally pay a higher commission than borrowers do. When lenders compensate mortgage brokers, they typically pay between 0.5% and 2.75% of the total amount of the loan. When borrowers pay the commission, mortgage brokers usually charge an origination fee that equals less than 3% of the loan amount.
The housing market
In many cases, mortgage brokers decide their commission rates based on the housing market in their area. For example, those who work in a more competitive housing market may charge lower commission rates, so they can position themselves as a better and more affordable choice than other mortgage brokers. In markets with less competition, the broker might charge more since buyers have fewer options.
What do mortgage brokers do?
The role of mortgage broker involves helping people secure and close mortgages or home loans, which includes the following responsibilities:
Researching loan options, monitoring new mortgage offerings and finding products and rates that meet their clients' needs
Negotiating rates and terms with lenders and confirming loan details with underwriters
Accessing clients' credit reports to verify their reported income and expenses
Coordinating loan details and paperwork with clients and real estate agents
Developing relationships with lenders
Create mortgage packages to offer borrowers
Completing continuing education programs to maintain their licensure
Building and maintaining relationships with realtors
How do you become a mortgage broker?
To become a mortgage broker, follow these steps:
1. Earn a bachelor's degree
First, complete an undergraduate program at an accredited university. Consider choosing a course of study in finance, economics or accounting, which can help you develop the mathematical and analytical skills for a successful career as a mortgage broker.
Pursuing a major like business administration can also help you master the basics of this industry. Some schools give students the opportunity to specialize in a particular area of business, like real estate or investment management.
2. Gain experience
Taking an entry-level or associate job at a bank or real estate firm can help you develop valuable skills, like time management and negotiation. Working as a loan clerk or assistant to a realtor can also allow you to build your knowledge about the real estate industry, which can be valuable as you progress toward your goal of being a mortgage broker. When you start working in the industry, take the opportunity to make connections with colleagues or find a mentor who can help you in your career development.
3. Take a pre-licensure class
Next, enroll in a pre-licensure program to verify your skills before getting a job as a mortgage broker. This standard program includes 20 hours of classroom instruction that covers topics like mortgage origination, ethical issues for mortgage brokers and federal and state regulations. The National Mortgage Licensure System oversees pre-licensure programs for mortgage brokers.
4. Pass the licensing exam
After completing the pre-licensure program, take the licensing exam administered by the National Mortgage Licensure System. The exam is available at any time throughout the year and includes questions for national and state test-takers.
Once you've passed the exam, along with a background and credit check, you can receive your Mortgage Loan Originator (MLO) license for your state. Check with your state's licensing board to find out about any additional requirements for your location. Most MLO licenses last for a year and are state-specific. If you move states, you can recertify in your new home.
5. Complete on-the-job training.
Once you have an MLO license, you can start out in an entry-level mortgage broker job. Typically, mortgage brokers begin their careers working for mortgage brokerage firms or banks before deciding whether to become an independent contractor.
When you first begin, you might complete a training program where you work with an experienced mortgage broker to learn about the process. Most mortgage broker training programs last for a few weeks and teach new hires about internal processes and workflows.
6. Maintain your licensure
To learn technical skills and new mortgage rules, you can take continuing education classes throughout your career. As a mortgage broker, you might take a certain number of continuing education course hours to renew your license each year. These educational programs also offer you the opportunity to build your professional network, learn about key regulations that affect mortgage brokerage and discover new technological tools that might make your work easier.
Related: 12 Types of Continuing Education
Frequently asked questions
What's the job outlook for mortgage brokers?
The United States Bureau of Labor Statistics predicts a 5% increase in jobs for real estate brokers and sales agents, a group that includes mortgage brokers, from 2021 to 2031. This increase is about the same as the overall increase in jobs across industries and includes an estimated 54,800 openings for jobs in this sector. Factors like housing market conditions, available supply and average income can affect the job outlook for mortgage brokers.
What type of work environment do mortgage brokers have?
Typically, mortgage brokers work in office environments, often as a part of a mortgage brokerage firm or bank. They might also work from home, using a home office and high-speed internet connection. While they primarily communicate with their clients over the phone and through email, they might meet with them in person, especially at the beginning and end of the process. Mortgage brokers usually work during regular business hours, but they may work some hours in the evenings and on the weekends if their clients have urgent deadlines.
What are some similar jobs?
Here are some jobs that share skills and duties with mortgage brokers:
Real estate agent
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