How I'm Compensated ...
My business centers around providing free information to my potential clients. Unless you end up transacting a mortgage through me, you won’t be charged for my services, and that's okay.—Hopefully I'll still be able to provide you with enough valuable information that you’ll think of me when you think mortgage consultation.
What’s more, if you even go so far as to let me show you what kind of deals I can offer you, you’ll likely find that your net cost of borrowing will be substantially less working with me than if you borrow directly from a lender.
Of course, if you close a loan through me I’ll get paid, but in the vast majority of cases that's through what's called “lender-paid, broker compensation.” When broker compensation is “lender-paid,” the rate and fees a lender offers via a broker factor in the compensation the lender will have to pay the broker once the loan is funded. In layman’s terms, lender paid compensation simply indicates that my compensation is baked into the rates and fees I quote you.
I make it my policy to always explain to my clients how much I'll be compensated once we've identified a lender. The average compensation paid to C2 Fincancial Corporation and me by lenders is 1.5% of the loan amount, but again, unless I specifically disclose to you otherwise, that compensation is already included the lenders’ rates and fees I offer you.
Since 2008, broker compensation has shifted increasingly to this lender paid model, which is a good thing. This way, borrowers like yourself get an "apples to apples" comparison looking at different lenders' rates and fees, whether you're working with a broker or on your own.
You may be asking yourself though: "How can these magical lenders you work with compensate a broker, on top of all their lending costs, and still offer me the best mortgage rates available?"
The most obvious answer to this question is the access I can provide: Having broker relationships with over 100 different lenders (and software to quickly search the products and pricing they’re currently offering), I can show you a much wider selection of mortgages than any lender I’m aware of.
Still, a more important reason I can offer great deals comes down to the difference between two major types of lenders: direct (AKA retail) lenders, and wholesale lenders.
The majority of lenders I work with are of the “wholesale” variety – that is, they only lend through mortgage brokers like C2 Financial Corporation. In this model, the lender outsources the costs associated with originating a loan: speaking with potential borrowers, collecting the information and documentation needed for their applications and loan packages, marketing mortgage services to the public, developing and maintaining relationships with clients, analysis of borrowers’ financial situations, loan processing, and the regulatory compliance issues of interfacing with the public.
Simply put, by outsourcing to me what I do best - scouring the market for the right product for my clients, and handing the front end of the mortgage business, good wholesale lenders free themselves to focus on the back end of the business they do best. Together we make up a more efficient and customer-oriented system than that of most retail lenders.
If you still have any questions about how I’m compensated, or about anything mortgage related, please don’t hesitate to contact me. And if you’re curious about what separates good lenders from lousy ones, or just want to understand the mortgage industry better, stay tuned for my blog where I’ll be covering these topics and much more.