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Calculate Your Commission Checks
Wednesday, January 08, 2025
Michael Smith
Here at Mortgage Systems USA, we help non-mortgage business owners make more money by offering mortgages to their client base. Zero mortgage experience is required and you don't have to become a mortgage expert.
This is a perfect fit for most independent insurance brokers, financial planners, estate planners, and divorce attorneys.
One of the biggest advantages to our program is the large commission checks.
In this article, I am going to dive into some specific dollar amounts so you can see for yourself and decide if offering mortgages is right for you and your business.
What is the max commission you can collect?
Mortgages fall into three categories: Regular mortgages, reverse mortgages, and home equity loans.
Your commission will vary from one category to the next.
Regular Mortgages
When a person gets a mortgage to purchase a home or they refinance their existing mortgage, it would fall into this category. If you've heard of Fannie Mae, Freddie Mac, FHA, VA or USDA mortgage loans, these are all examples of regular mortgages.
On these loans, you can charge up to 2.75% of the loan amount plus an Admin Fee of $300 to $900.
You are the one who chooses what you'll charge.
If you were charging 2.75% on a $300,000 loan amount and including an Admin Fee of $900, your gross commission would be $9,150.
Reverse Mortgages
A person who is 62 years old or older can qualify for a reverse mortgage.
A reverse mortgage has no monthly payments for the homeowner. Instead, the loan is paid back when the homeowner passes away or no longer lives at the home. The homeowner retains title to the home, not the lender.
The reverse mortgage can be used to pay off an existing mortgage or it can be used to purchase a home.
On these loans, you make a commission based on the Principal Limit (reverse mortgage terminology for the loan amount) and you can also charge an origination fee.
The commission rate varies based on market conditions and the origination fee is typically capped at $6,000 depending on the value of the home. Again, you choose the commission rate you'll charge the borrower.
As of today, for a home worth $500,000, your gross commission would be $9,500.
Home Equity Loans & Lines of Credit
When a homeowner wants to cash-out some of their home equity without refinancing their mortgage, they apply for a home equity loan or home equity line of credit.
These loans can have big loan amounts when the homeowner wants to use the proceeds to remodel their home, buy another property, or buy a big toy such as an RV or boat.
For home equity loans, you can charge up to 3% of the loan amount. For home equity lines of credit, you can charge up to 4% of the initial amount that is drawn at closing.
Like traditional mortgages and reverse mortgages, you choose the commission rate you'll charge.
If you were charging 3% on a $150,000 home equity loan, your gross commission would be $4,500.
This is NOT smoke & mirrors. These are actual mortgage commission checks.
How to Easily Beat your local banks
What I just covered are the maximum amounts you can typically charge, but you might be wondering how low you need to go to be competitive with your local banks.
That is another thing that is really great about offering mortgages to your clients: For regular mortgages, it is very easy to beat the bank's rate and fees if you are charging 2.25% commission plus an Admin Fee up to $900.
You pocket a large commission and your client gets a great rate with low fees!
My mortgage company, Ocmulgee Mortgage Company, is located in Macon, Georgia, about an hour south of Atlanta. We charge 2.15% on most regular mortgages and we beat the socks off all the local banks.
Brian, my partner here at Mortgage Systems USA, has a mortgage company (Key Home Funding) in Irvine, California, between LA and San Diego. He charges 2.25% and the banks there can't touch him either.
Here are a few example commissions if you were to charge 2.00%
- $175,000 = $3,500 commission + any Admin Fee charged
- $350,000 = $7,000 commission + any Admin Fee charged
- $500,000 = $10,000 commission + any Admin Fee charged
- $750,000 = $15,000 commission + any Admin Fee charged
- $1,000,000 = $20,000 commission + any Admin Fee charged
What gets deducted from your commission check
Another thing that's great about our program is that you, the business owner, keep all of the commission.
There are various loan fees involved but those fees are passed to the client and either paid upfront or at closing. They are not paid by you or deducted from your commission check.
- NO Appraisal Fee. The lender usually requires a home appraisal. The client pays it upfront or at closing. It is NOT deducted from your check.
- NO Processing Fee. Our Fulfillment Center processes your loan for you and the client pays the Processing Fee at closing. It is NOT deducted from your check.
- NO Title Insurance Fee. The lender requires title insurance. The title insurance and all of the related fees are paid by the client at closing, not you. It is NOT deducted from your check.
- NO Closing Fee. A Closing Agent is required to handle the money and record the new deed. All of the Closing Agent fees are paid by the client at closing, not you. It is NOT deducted from your check.
Because you keep all of the commission and the costs to run our program are inexpensive, you're left with plenty of profit to pay one of your staff members a sales commission if you like, but that's totally up to you.
If you were to pay a commission to one of your staff members, a typical rate would be .25% to .50% of the loan amount.
So if you were charging a 2.00% commission rate and paying a .50% commission, you would net 1.50%. On a $300,000 loan amount, that would mean you net $4,500 (plus any Admin Fee you charged) and your staff member would earn $1,500.
Remember, our program is dirt simple to run and you won't need to hire any new employees. You can run it with your present staff because the lender, processor, title company, and closing agent do most of the heavy lifting for you. You can pay a commission to your staff, if you want or not.
How much goes to Mortgage systems uSA?
When we created the program, we initially planned to keep half of the profits but, for now, what you need to know is this: We decided against working that way.
You keep all the profits.
You make money you never would have had. You put the program in place, sit back, and collect checks.
We make our money as a one-time fee when you sign up with one of our Mortgage Facilitator programs or when you subscribe to one of our Mortgages Made Easy plans.
When our Fulfillment Center processes your loans, they are paid by your clients at closing.
The bottom line? Mortgage Systems USA deducts ZERO from your commission checks.
how & When do you get paid?
You can choose to receive your commission by paper check through the mail or overnight delivery, or by wire into your bank account. (A few Closing Agents will only do paper check.)
Your commission is issued within 1 business day of the loan closing and sometimes it is issued the same day.
Most mortgage loans can be completed within 15-30 days of taking the application so you can literally take an application one day and get paid 15 to 30 days later.
Do you ever have to return the commission?
If the client pays off the loan within the first 6 payments or they never make the first 6 payments, you are subject to return a prorated amount. This is referred to as commission recapture or buyback.
This rarely happens, if ever.
I've been in the mortgage industry since 2007 and Brian has been in the industry since 2005 and neither of us have ever had a recapture.
Run the numbers & see for yourself
I was on the phone this morning with an insurance broker in North Carolina.
After going over these numbers, he said "Even if I just did 5 loans a year it's worth it" and it's true.
Our program is designed to keep your overhead super low so it's easy to turn a profit with 1 or 2 transactions a year. Everything else is gravy.
Go over to Zillow and check out the average home prices in the areas you serve. To estimate how much your average loan amount would be, calculate 90% of the home price and then calculate your commission check by using the info in this article.
Want to learn about making killer money by offering mortgages, home equity loans, and reverse mortgages to your clients?
If this looks interesting to you, don't wait and lose out. Click the button below and fill out the form.
To recap, we offer non-mortgage business owners a complete, turnkey profit center in the 1.4 trillion dollar mortgage industry. Zero prior experience is needed. You and your staff do not have to become mortgage experts.
We call it the Mortgage Facilitator and if this sounds interesting to you, click the button below to fill out the form and learn more.
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This is not legal or tax advice. Consult your attorney about legal matters. Consult your tax professional about tax deductions. Consult state licensing authorities about licensing matters. Earnings and income statements are estimates based on our experience. There is no guarantee you will achieve similar results. Any earnings or financial benefits can vary based on your individual circumstances, skills, and the specific actions you take. You should always conduct your own due diligence before making any financial decision.
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