I get asked a lot about how I get paid. The answer is both straightforward and complex at the same time. I’ll give it my best shot here.

It is important to state that Loan Originators, the person you are working with on your mortgage, is considered a Sales Person. As with most sales positions a Loan Originator is paid, usually, on a commission basis. Sometimes that commission is a simple dollar amount per loan closed, sometimes that commission is a percentage of the loan amount. That percentage can vary wildly between mortgage companies and even Loan Originators within the same company or branch. It’s not uncommon for two Loan Originators working for the same company or same branch of a company in cubicles or offices next to each other to be compensated very differently.

Often branch managers and more experienced Loan Originators make substantially more than more junior Loan Originators.

Loan Originators paid on commission are paid as a percentage of the loan amount. It is important to note that lenders are paid on the loan amount and not the purchase price. The terminology for how a commission is calculated are basis points, or bps (pronounced bips). A bp is 1/100th of a percent. So, 100 bps (bips) is 1 percent of the loan amount. As an example, if you are purchasing a $500,000 home and are putting 20% down ($100,000) the loan amount would be $400,000 and if that Loan Originator makes 100 bps on the loan their compensation would be $4,000.

The higher the loan amount, the more the Loan Originator makes. Period.

The only way a Loan Originator can make more off of your loan is to have a higher loan amount. Now, this could be by you purchasing a more expensive home, or it could be by talking you into putting less down. A good Loan Originator will always talk you through the pros and cons of putting more or less down and give you examples that personally apply to you so you can make an informed decision. It is often true that putting less down can make sense to the buyer.

Using the above example let’s say you are still purchasing a $500,000 home but you decide to put 10% down instead of 20% down. Perhaps you realize that the extra $50,000 can help you furnish the home, pay down some bills or buy a new car. As long as it makes sense you can do this. In this example, the lender would make 1% additional off of the $50,000 higher loan amount, meaning their compensation would increase from $4,000 to $4,500 for your loan.

Most Loan Originators will also show you different programs that may make sense for your situation. You may have the option of an FHA loan, a VA loan, and thank you for your service, or a First Time Homebuyer Conventional Loan. The actual loan amount between these programs make has small effects on the loan amount, but the compensation for the Loan Originator will not change, normally. As an example, if you are choosing between the 3.5% minimum down of an FHA loan or the 3% down of a conventional First Time Homebuyer program that difference is a difference of $2,500 in the loan amount or $25 to the Loan Originator.

Thus, with one Loan Originator working in a call center they may make $500 for originating a $400,000 mortgage or you might work with a Loan Originator who makes 250 bps on the same loan meaning they will pocket $10,000. In either scenario, you may have the same rate, same closing costs, and your disclosures might be identical. When a Loan Originator makes less, the company makes more along with the converse. It is not uncommon for a mortgage company to make 350 bps, the maximum allowed by law, on a mortgage. Thus, using these two examples, the company stands to make somewhere between $13,500 and $4,000 on the same loan based solely on how they pay their Loan Originator.

Finally, if your Loan Originator works for a branch and has a branch manager and/or sales manager they may receive an override or part of the commission. Essentially if your Loan Originators’ company takes 50 bps off the top of each loan for-profit and services then the difference between 300 bps and what your Loan Originator makes is what the branch, branch manager and/or sales manager might make. Regardless, none of this changes what your closing costs and fees associated with the loan are. This is just what the lender is paid to originate the loan, remember this is all just sales.


Most lenders have one goal. Close your loan. How they get there, and how they do their job, varies from Loan Originator to Loan Originator, but in the end, and here’s the brutal truth, they will do anything to close your loan. If your loan doesn’t close… they don’t get paid. 


Now, some lenders make an hourly wage but most of those are draws against commission. Meaning they get paid an hourly wage but, essentially, have to pay it back when they close a loan. There is nothing more demoralizing as a lender than to have a nice closing and all of the commission go towards paying off your draws. And they will do anything, and say anything, to make sure that doesn’t happen. 

The other piece most people don’t know is that in most lending organizations the Loan Originators are salespeople. They are paid like salespeople. They are (dis)respected like salespeople and they act like salespeople. If you have ever purchased a used car then you’ve met the cloth most Loan Originators are cut from. 

Of course, no mortgage company would exist without their ‘sales’ staff. The money that is brought in to lenders on these mortgages is the fuel that runs the entire organization. The Loan Originators know this and often act like they walk on water. (Note… they don’t)

If a lender has a chance to steal someone else’s deal, from another company, of course, they will do everything they can. Up to and including making outrageous and morally flexible claims. 

As an honest and transparent lender, I always estimate fees high. I find it always best to set the expectations for the worst-case scenario and have the costs of the fees come in lower. Morally flexible lenders trying to steal a deal will tell you that they have no fees, they do, that there are no closing costs, there always are and that their rates can’t be beaten, they can. If you are shopping between lenders, which I totally encourage, and one lender sends you a Loan Estimate with actual fees and rates that are expected and the lender you are shopping with is unwilling to do so, they are not being honest. If you are the type of person who shares information from an honest and transparent person with someone trying to steal a deal, and you don’t give the original person a chance to meet what is being proposed, then the moral flexibility is on you. 

I work very hard on behalf of my clients. I can compete, I always do and I always win. I always win on honesty and transparency and I always win on going the extra mile and working hard on your behalf. When there is a tangible and authentic loan estimate that I cannot compete with or is a great deal, I let them know. I know what I can do and I know what I am willing to do. 

I recently lost a deal to a client I had been working with for over eight months. I spent countless hours on the phone with them, talking to listing agents and sellers on their behalf and being available virtually every day at virtually every hour. Once they went under contract I did my required duties and sent them a proper Loan Estimate. They promptly sent that to another lender and never gave me the opportunity to meet or review the other lender’s loan estimate. They never gave me the courtesy of a phone call informing me that they went with another lender. They used their moral flexibility. They used my services and time and efforts for the better part of the year to get them their dream home and when the rubber met the road they weren’t willing to give me five minutes. 

I, of course, wish them the best of luck but in the end, treating people who have invested so much on your behalf as a commodity is an insult.

Those lenders who actively employ Loan Officers who act differently are not the ones you want to do business with. Find a partner who you can trust. Find a partner who is willing to invest their time and best efforts in you and your financial future. Find a partner who is honest and transparent. And if you do shop in the end, give them the opportunity to see what they are up against and let them see what they can do to match or beat rates, fees, etc…

Otherwise, you might be the reason why that honest and transparent relationship-based lender becomes a salesperson in the end. Regardless, I remain unswayed. Mine is the best way to be a Loan Originator. That of being a mentor, being available, and being honest and transparent. 


Why is it painful to use a cubicle-based mortgage professional? Well, most often, they are in a call center. So, perhaps, I could have titled this “The Pain of using a Call Center based Mortgage Professional” but, alas, I did not. 

Mortgage Professionals who work in call centers, and in cubicles, in my post-work primarily off of leads. By definition, this means that they are transactional lenders. It’s all, and only, a numbers game. A lead comes in. The lender calls, or answers the call, gets an application going, or doesn’t, it doesn’t matter. They don’t care. If the person on the line is unsure about putting in an application they are either pressured to do so, just put in an application so we can see where you are at, or they are dismissed and hung up on. 

Why does this matter? Well, here’s the rub, if you put in an application and if you provide your social security number and if you click submit if on a website, or simply give someone your social security number you are authorizing them to pull your credit. If someone is worried their credit is too low to qualify and they give someone their social security number then they just approved a hard pull on their credit and its’ associated 4 point cost against their credit score. 

If they were too low to qualify then they are now just that much further away. 

If the call center mortgage professional hangs up to move on to their next lead from this one that will be too much trouble then the interested party is set adrift. They have wasted their time and they have no answers. They are no closer to a home than when they started and they might be discouraged. And this is bad and not fair. 

As I’ve commented already the mortgage process is very complex and borrowers, especially first-time homebuyers and people who might have not gone through the process for an extended period of time, might not be comfortable or familiar with the process. And to simply be dismissed is a disservice. Cubicle and call center mortgage professionals are not incentivized to be mentors and partners through the loan process. They are about volume and production. 

If you love being treated like a number, then click that app or log in to that website recommended by a sports professional. If you’d rather have a partner that works with you every step of the way, find a relationship-based lender. 

There is another important reason why cubicle lenders are a bad loan partner. Availability. Often their hours are set, forty hours a week and not a minute more. If their hours are nine to five and you need them at six-thirty, they won’t be there. If they work Monday through Friday and you need an updated lender letter Sunday evening at seven-fifteen, you are out of luck. Think about when you will be shopping for a home? The days. The times. Are they during business hours? Monday through Friday, nine to five? Or are YOU looking after business hours, after work, on the weekends, etc…? You will want and need to have your lender available during these non-business hours. If you are using an app, a transactional lender, a cubicle lender, or a call center lender you might very well have difficulty getting what you need to put in an offer outside of business hours. And this will be very frustrating. 

Finally, these cubicle, transactional and call-center lenders are paid very little per loan. They have no skin in the game. They have no reason to be available for you when you need them to be available to you. They have no reason to spend more than the bare minimum amount of time on your loan, which, as I’ve already stated, is a very complex process. 

Having someone want to spend as much time is necessary for you to make the best possible decision on what is, most likely, the largest purchase and largest debt in your life to date has huge value. Being reassured that a friendly and interested voice is available to you when you need that answer to what escrows are, to why you need mortgage insurance, to do math about how much to put down on the purchase, and to talk through the numerous products and programs available will always prove to be invaluable. 

Choose wisely. 


There’s an old saying; “There’s no such thing as a free lunch.” And although millions of students who get free school lunches might argue, those aren’t free either.

As a lender, I frequently get asked if I can meet a builder’s lender’s incentives. Which, to be clear, are incentives the builder is giving to use their preferred lender. Things like upgraded countertops, free basement, lot upgrades, etc… but none of these are free. I’ll get back to this in a few paragraphs.

How about down payment assistance (sometimes referred to by the initials DPA). These are programs, often government-supported or sponsored, that give a portion of the loan amount as a down payment. Some of these are paid back in the future but at zero percent interest. Hey, isn’t zero percent interest-free? No. Some decrease in the balance due over time, usually 36 months, and when that clock hits zero the down payment assistance no longer has to be paid back. Isn’t that free money? No.

OK, my lender promised me $500, $1,000 or more in lender credits, aren’t those free? No.

Nothing is free.

Builders and lenders often play a shell game with costs, purchase price, loan amounts, and upgrades. It’s very common, that the builder will raise the purchase price of the home by the exact amount of their tremendous incentives. Here’s a real-world example I saw. The borrower was purchasing a home for $529,000. The initial contract was for $529,000. The buyer added $30,000 in upgrades, granite countertops, better appliances, etc… bringing the actual purchase price to $559,000. The builder offered $15,000 in discounts and incentives to use their lender. The borrower was specifically told they would not be charged any points, prepaid interest, on their awesome rate. At closing the borrower had to pay $5,590 in points, 1%, and they were informed their purchase price had to be raised to $574,000. So, the borrower not only didn’t get ANY discounts or incentives, they ended up paying $15,000 more for the home plus $5,590 in points for a total swing of $35,590 more than they should have. There were no incentives. The builder just made more. Those $30,000 in free money incentives ended up costing the buyers a total of $35,590. Which, in my book, is money not well spent.

How about the down payment assistance programs. Those are completely free money. They aren’t. Most of them require a 1% origination fee just for doing the program. If you use the previous numbers, just because they are valid home expense numbers, if the borrower had used down payment assistance there would have been an additional $5,740 origination fee. Additionally, virtually all down payment assistance programs, have higher interest rates. Sometimes only slightly, but sometimes tremendously. It depends on the program.

Now, I’m not talking smack about DPA. These are great programs that can get people who otherwise can afford a home but don’t have enough for a down payment to become homeowners. I’m just saying the money isn’t free and there are costs associated with these programs. If it is possible to not use ‘free’ money you should. It’s almost always in the borrower’s best interest to do things on their own.

Finally, lender credits. These are free right? Well, no. Just because the borrower doesn’t see the expense, the lender often does. Often these credits come out of your personal lender’s commission. Sometimes they are branch concessions and sometimes they are company concessions. Regardless someone has to pay for your free money.

My advice is to get all the costs, fees, and information associated with your mortgage and find a personal lender you can trust! Someone who is transparent and honest.

In this day and age of instant online offers to sell your home with no listing fee, no open houses, no showings, and no interruption to your daily life it seems like realtors should fear for their jobs. Well, no.
OK, part of this is accurate. Those realtors that charge a full commission to do nothing other than slap up a sign and put your home on the MLS should very much live in fear. Those production only with no relationship-building realtors should be very fearful. Better realtors and progress are coming from your lazy money.
I once had a realtor tell me that if you spend more than 4 hours listing a home, meaning actual work on a listing, you are doing it wrong. For the privilege, if this four hours this realtor is saying their knowledge, time and effort are worth 3.2% (common in Colorado) to list your home. How much is this? Well if your home sells for $525,000 that four-hour or less realtor is making at least $17,600 or $4,400 per hour. Awesome work if you can get it, but this approach, and attitude, gives all realtors a bad name.
A good listing agent, and I know more than a few, will spend countless hours on your listing. From the initial walk-through to small touch-up advice, to staging your property, doing open houses, and, in our market, summarizing possibly dozens of offers down to the top ones for you, and your family, to choose from. This isn’t even to mention the hours of work running comps (pricing on comparably sold homes to get you the best possible price).
Why is their time and experience so valuable and worth so much of your equity? Well, because here’s what the instant offer websites do instead of a proper agent.
They also pull comps on your property. They proceed to offer you 5-10% below market value for the convenience of not putting your home on the market. You will also be required to do any, and all required updates or repairs that they deem necessary. They do the repairs, at their chosen costs and reduce your offer price even further. It is not uncommon for, once all is said and done, for your discount no-interruption to your daily life sale of your home to put 7-15% less cash in your pocket when all is said and done. They then turn around and sell your property for 15-20% or more than they finally paid you. Yes, you didn’t have any open houses or showings. Of course, it was more convenient and less intrusive, but good golly. Your home that a listing agent would have sold for $525,000 with you walking away with $488,250 (6% to buyers agent and listing agent and 1% for title work that the seller pays for). $446,250 (15%). I don’t know about you but having strangers wander through my home is worth 8% more in my pocket.
You see a good realtor knows the area. They know how to market your home. They may already have buyers lined up. They certainly know other realtors to reach out to and, most importantly, you can trust what they say. You can call them virtually any time and they are there 100% for you and your family. Their experience and knowledge is worth every penny.
Finally, and remember this, nothing you pay them is cash out of their pocket. If they don’t sell your home they don’t get paid a nickel for all the time and effort they put in on your behalf. They get paid when you get paid. They have your best interest at heart and will go through every contract, every offer, and every document with you word by word if you desire. There is nobody to review your online offer or cut-rate service contracts. You are on your own and trust me when selling your most valuable asset, you don’t want to be on your own.