Most mortgage sales professionals are paid commissions based on a number of basis points of the loan amount they originate. Over 50% of mortgage professionals earn between 75 and 150 basis points. So what determines what basis points loan officers or producing managers earn and how do you increase that number?
The answer to what determines the basis points earned is that it depends on the company you work for and their business model. The biggest differences in companies business models are around the support and operations provided, how pricing is set/the interest rates you sell to consumers, how you and/or the company markets/generates business, management compensation, corporate revenue margins, and how the mortgage company and you manage risk and certain expenses.
There are a number of risks and expenses involved in originating mortgages and operating a mortgage company. Mortgage sales professionals tend to focus on the expenses in originating a mortgage like their marketing efforts and expenses, the branch office lease and operating expenses, loan officer compensation, as well as the branch processing and support staff. Senior management at mortgage companies pay attention to these items as well as risks involved with legal or compliance issues, interest rate/secondary market risks, and loan buybacks. Furthermore, senior management has to manage:
The following include ways to increase your loan officer or producing branch manager compensation:
1. Develop a referral-based business or profitable marketing system. When your business is self-sourced, the risk of the company losing money marketing or from employee compensation and benefits is reduced significantly. That income is often paid to you through higher basis points.
2. Take control over the branch office expenses. Mortgage sales professionals and managers who work to keep costs low or take on the risks associated with operating the office should be compensated more for doing so. Successful managers should see their compensation increase by 50-75 basis points in exchange for accepting this risk. However, if you are not a successful branch manager, you will probably lose 25-50 basis points you could have earned with a company that accepts all the office expense risk.
3. Take control over pricing. You know what the pricing in your market is better than anyone else. You may have to lower your pricing/rates to the consumer and the basis points earned on each loan. However, with additional volume, total compensation/W-2 can increase. Find a company that will give you the control or flexibility to establish the pricing you need in your market.
4. Take control and responsibility over the staffing of the office. This would include hiring and managing any processors, loan officer assistants/production partners, business development staff, or other operations staff.
5. Develop a system to recruit, train, and manage loan officers and their compensation.
If you want the reward of increasing your compensation, take control of the decision making for your business and accept more of the risks. Profitability is key, whether you are working as a solo branch manager in a small office/executive suite or a larger office. What is right for you is to find a company that fits your career goals and matches your tolerance for risk, reward, and control.
Have confidence in your abilities and invest in your business! While the mortgage business is challenging, it is also very rewarding.
Loan Academy is an independent mortgage recruiting and training company. We specialize in connecting exceptional managers and loan officers with leading mortgage companies that maintain a culture of excellence, trust, and transparency.
If you would like to confidentially explore a better career opportunity or discuss various compensation models/opportunities visit our website at www.loan-academy.com or contact Jeff Flees today at 877-721-4822 or firstname.lastname@example.org.
If you would like help with continuing education or licensing training, click the following link: https://tinyurl.com/CEandtraining-LA.