When starting any new job within the mortgage industry, there are several factors you will want to consider. One of the biggest factors to consider when contemplating starting a career as a mortgage loan originator is compensation.
Let’s face it, you will be dedicating a lot of hours working for this company, it’s only fair you how you will make a living. But in some cases, compensation can get a bit murky as mortgage loan originator pay can fluctuate from company to company. Some brokers only pay mortgage loan originators a basic salary whereas others pay a base wage in combination with other performance-based commission and bonus incentives.
There are also many firms that structure their mortgage loan originators’ compensation much like a realtor at a brokerage firm in that it’s solely commission-based. If you are used to collecting a traditional paycheck, switching to a commission-based compensation structure can take a little getting used to.
Lastly, discrepancies between mortgage loan originator pay can be attributed to how a company has structured its operations. That makes it even more important for you to understand your new MLO role in relation to the company’s overarching business model.
Mortgage Brokers, Bankers, and Loan Officers – What’s the Difference?
There are many differences between mortgage loan originator professionals. The three big titles that fill this bucket are mortgage brokers, loan officers, and mortgage bankers. While remarkably similar, each of these roles is a little different with respect to how your company conducts business.
Mortgage Brokers
One of the most common mortgage originator roles you can accept is that of a mortgage broker. Mortgage brokers perform all the heavy lifting for their borrowers by shopping around for the best mortgage option on their behalf.
Typically, mortgage brokers have spent time building connections with a variety of mortgage lenders. Leveraging these relationships, they find the best financing solution for their borrower and then function as an intermediary between the lender and borrower.
Mortgage brokers do lend money to borrowers, nor do they approve loan applications. Rather, they collect borrower information, help them complete their loan application, and relay communications between parties until the credit request has been approved or denied.
Mortgage Bankers
Dissimilar to mortgage brokers, who have little say in what happens once a loan application has been sent to underwriting for review, mortgage bankers are more of the full package.
Mortgage loan originators that work as mortgage bankers usually work files from start to finish. This means you will take a borrower’s loan application, aid the borrower throughout the underwriting process, and continue to assist your client all the way through closing.
Unlike mortgage brokers, mortgage bankers either lend you money directly or get the money from a bank. Mortgage bankers are good at building relationships with various institutions, which offers borrowers a ton of financing options. Typically, mortgage bankers can originate all types of loans and work with all kinds of applicants. While many mortgage banking firms require their mortgage loan originators to have a longer tenure in the industry compared to other roles, it isn’t always a prerequisite for employment.
Mortgage Loan Officers
As a mortgage loan originator, you also have the option to work as a mortgage loan officer. Mortgage loan officers typically work for accredited banks, credit unions, or digital providers.
Loan officers can offer a multitude of financing options including conventional and government-backed programs. However, the biggest difference between mortgage loan officers and brokers is that mortgage loan officers typically only offer products solely from their lenders. This limits the number of options a borrower has to choose from.
In most cases, mortgage loan officers will work closely with a dedicated, internal underwriting department at the company and serve a similar intermediary role as you would as a mortgage broker. The biggest difference between working as a mortgage broker and a mortgage loan officer is the number of options you can provide to a borrower as they shop around for the best mortgage deal.
Typical Mortgage Loan Originator Compensation
There are a number of factors that impact a mortgage loan originator’s salary including your employer’s compensation structure and the capacity at which you will be working as a mortgage loan originator. Recent reports indicate that mortgage loan originators can expect to earn anywhere between $76,963 and $426,781 per year, with an average annual mortgage originator salary somewhere around $180,000.¹
However, by most accounts, including the Bureau of Labor and Statistics, the median pay of most mortgage loan officers to be $63,380 per year in 2021.²While this is probably a more accurate and conservative representation of what the typical mortgage loan originator can expect to make, understand that market conditions can impact your earnings potential as well.
For example, when mortgage interest rates are low, consumers are incentivized to borrow meaning you have more opportunities to originate more loans. Also keep in mind that these estimates may not account for other added forms of compensation, including bonus and commission incentives, which are normally paid outside of base wages. For some companies that are strictly commission-based, performance is normally linked to earnings. In fact, generally the more loans you originate the higher earnings potential you have. Here are a few ways that top-earning MLOs distinguish themselves over other peer professionals.
Tips for Becoming a Top MLO Producer
If you are looking to become a top-earning mortgage loan originator, there are several things you can do to boost your loan origination volume.
1. Become a Credible Resource
One of the best ways to become a top MLO producer is to become a credible resource for new borrowers seeking home financing. Positioning yourself as an expert that can think creatively and offer solutions to borrowers to get them into a new home is important. One way to build credibility is by highlighting client reviews from prior transactions through your website, social media, and other consumer touchpoints. Providing new borrowers with educational material and resources also adds credibility as it demonstrates both advocacy and empathy.
2. Develop a Strong Network
Building a strong professional network can increase your loan production volume. The best way to do this is to extend and deepen your professional network. Finding accountants, attorneys, realtors, and home inspectors to add to your network can be key to obtaining new mortgage referrals. Meeting these contacts could be as easy as attending a community event or joining your local chamber of commerce.
3. Embrace Digitalization
Providing a digital experience to your clients is crucial to remaining competitive as a mortgage loan originator. Equally as important is leveraging digital tools and resources yourself to help optimize your process. For example, JPMLO allows you the option to complete your MLO continuing education training exclusively online if that’s your preference. This can help you free up time in your day to add value by performing other MLO duties.
Key Takeaways
Understanding how companies will compensate you for performing mortgage loan originator duties should carry some weight when making the decision to work for them as an MLO. Furthermore, identifying the specific role you will play as an MLO is equally important as it relates to overall compensation. There are slight differences between how mortgage bankers, brokers, and loan officers operate, as well as how they are compensated.
To become a top MLO earner, it’s important you figure out how to optimize your mortgage loan origination process so that you can fully capitalize on your company’s overall MLO pay structure.
Sources
1 Mortgage loan originator salary in the United States. (n.d.). Retrieved September 29, 2022, from https://www.indeed.com/career/mortgage-loan-originator/salaries
2 Loan Officers : Occupational Outlook Handbook: : U.S. Bureau of Labor Statistics. (2022, September 8). Retrieved September 29, 2022, from https://www.bls.gov/ooh/business-and-financial/loan-officers.htm