With so many loan officer compensation plans in the market ranging from $500 per closed loan to 300 basis points on closed loan volume, how do you know which one is best for you? If you focus solely on which company pays the highest basis points, you may be making a big mistake. When determining which mortgage company has the “best” compensation plan for you, focus on the following two questions:
Which company will be best for you financially? While your W-2 income is primary, the benefits provided can be significant and should be considered.
Which company will be best for your long-term business and career goals?
The top ten factors to evaluate that affect how much money you will earn are:
Compensation plan/agreement: specifically the salary, draw, and/or commissions. Commissions are usually determined by basis points on closed loan volume.
Rates/pricing you are selling in the market.
Service/underwriting infrastructure, staff, and processes.
Processing/support staff, infrastructure, and processes.
Marketing platform: this may include leads, CRM, professional collateral, strategic relationships, lender reputation or brand.
Loan Products: considerations include direct agency approval, portfolio or niche products, and the overlays/minimum credit scores implemented.
Technology: point of sale/loan origination software, pricing engines, and online/mobile applications.
Management and culture: including how engaged the executive management team is, the business strategy/model, and whether or not the culture of the company is focused on their sales professionals, profits, or otherwise.
Benefits: including health insurance and retirement accounts.
Coaching and training that motivates and advances your career.
Bottom line: every company is different with unique strengths and weaknesses. It is important to find the right one for your business and career goals. Companies can’t be the best at everything; they may specialize and have competitive advantages in some areas while trailing the marketplace in others.
If you are looking for a company that supports high volume originators, they probably have an extreme focus on underwriting/service, technology and production support (processors/assistants). The “best” company for you is probably a non-bank direct lender or federally chartered bank focused in the residential lending market.
If you are looking for highest basis points, the “best” company for you is probably a non-bank lender with an entrepreneurial business model.
If you don’t have an established referral-based business, you may want to find a company that provides leads, has strategic relationships, offers niche products, or has an established brand. The “best” company for you is probably a community bank, “big” bank, or non-bank lender that has a lead-based business model.
If you are looking for the best rates/pricing, be careful these business models may find it hard to be profitable in the long run. In the meantime, the “best” company may be your own mortgage brokerage or a small flexible correspondent lender.
If you are looking for the most niche/portfolio products, the “best” company for you may be a mortgage broker or community bank.
Which company is best for your long-term business and career goals?
In addition to focusing on short-term compensation, find the company whose strengths and opportunity match your long-term business and career goals.
If you’re looking to manage a sales team, make sure the company has opportunities for advancement, infrastructure, and competitive advantages that will support your recruiting, training, and managing efforts.
If you’re looking to develop a referral-based business, make sure the company focuses on service and invests in technology.
If you’re at a stage in your career when work-life balance is very important, make sure the support personnel and processes are in place.
If you prefer more control in decision-making and a higher risk/reward, make sure the company offers you this flexibility and doesn’t have too many layers of management.
Training, education, or even a mentor should also be considered. Your desire and ability to learn may be the biggest factor in the advancement of your career.
The challenge is learning the facts/reality as some companies may make unrealistic promises in order to recruit you or change things like pricing once you are on board. Pay attention to the senior management, culture, and operations of the company. Change is a constant in the mortgage industry. Does the company have the infrastructure or ability to adapt to market dynamics like significantly increased volume or key personnel leaving? A few recommendations to help you determine the “best” company are:
Ask the management questions. Use the list above as a guide.
Call a few current and previous sales/branch managers or loan officers of the company. Their information may be on the NMLS or gathered from a third-party source, not directly from the company.
Speak with knowledgeable colleagues or industry professionals that you trust.
Find the company where your passion can lead to great success. If you have lost your passion for the mortgage business, you’re with the wrong company.
If you need independent advice you can trust, reach out to Jeff Flees at Loan-Academy.com today!
Jeff Flees • firstname.lastname@example.org • (877) 721-4822