October 2, 2023 • 18 mins
Ready to unlock the secrets of a prosperous career in the mortgage industry? Meet Jeff Smith, a seasoned mortgage broker with 18 years of insider knowledge. He's on a mission to offer insights to those eager to learn. In his latest episode of "Fairways and Finance", you'll gain understanding from Jeff about the numerous benefits of being a mortgage broker as opposed to a mortgage banker or working for a depository bank. Not only will you have insight into obtaining lower rates and avoiding flat fees, but you will also learn to negotiate deals with different lenders, ultimately saving clients both time and money.
The benefits don't stop there. Through Jeff's guidance, you will comprehend how, as a mortgage broker, you can finalize more deals due to the variety in underwriting philosophies, management styles, and products provided by various lenders. Jeff provides a real-life client scenario, allowing you to grasp how these advantages can lead to successful transactions that might otherwise be out of reach. Furthermore, you will delve into Jeff's personal journey, understanding how his lead-to-closing ratio dramatically improved after establishing his mortgage brokerage. Whether you're entrenched in the mortgage business or seeking to secure the best mortgage deal, this episode offers a wealth of insights. Don't miss this opportunity to gain knowledge from an industry expert - tune in today!
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LinkedIn: https://www.linkedin.com/in/jeff-smith-40627016/
Jeff Smith - Tiger Home Loans
📲 480.909.4000
📩 jeff@tigerhomeloans.com
🔗 www.tigerhomeloans.com
Equal Housing Opportunity
Tiger Home Loans NMLS: 2425582 NMLS: 413643
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:04):
Welcome to the show fairways and finance.
My name is Jeff Smith.
I've been in the mortgagebusiness for 16 years top
quarter percent L O nationwide.
And you know this podcast.
We want to talk about yourfinances, how to grow and
accumulate wealth and all thingsrelated to the mortgage
industry.
But we're golf lovers here aswell, so we're going to work in
some golf.
Don't worry for my golf loversout there.
(00:26):
We got you and I hope you enjoythe show.
Hey, welcome back to the show.
Everyone, jeff Smith, your host,and excited to talk to you
today about being a mortgagebroker.
And today you all want to keepthis fairly simple and go
through what I believe are thethree top reasons why you should
(00:47):
be a mortgage broker versus amortgage banker or working in a
depository banker or any otherkind of institution where you
can do financing for mortgages.
And so the top three reasons Ibelieve that being a mortgage
broker is the best place to beis number one client perception
as it relates to interest rateand fees, and then actually
(01:10):
having the lowest interest ratesand fees so those two go hand
in hand together the ability toshop rates with different
lenders and then hire commission.
So let's break down each ofthose three and why I think
they're so important.
So number one within theindustry, we know that brokers
have lower rates and they havelower fees compared to
(01:33):
independent mortgage bankingcompanies, compared to most of
the depository banks andcompared to most of the I would
call them centralized directlenders like a rocket mortgage.
So mortgage brokers have thisadvantage when it comes to lower
interest rates and, like at mycompany, for example, I don't
have any flat fees that I charge.
(01:54):
So most mortgage companiescharge a flat they usually call
it an underwriting fee or aprocessing fee somewhere between
$1,000 and $1,500.
So at my company I can getaccess to the lowest rates by
shopping with different lendersand I don't have any lender fees
.
So right off the bat, that's ahuge savings for my clients and
(02:15):
that can be measured against anyother lender and consistently
I've got some of the bestpricing out there.
So that is real.
Now what I think is even moreof an advantage than the fact
that I do have the lowest ratesand fees is that I can explain
that to clients and clientsunderstand what it means to be a
(02:35):
broker.
So clients, even if they haven'tbought a mortgage before,
financed a mortgage before.
They've worked with brokers insome other capacity.
A lot of times it's insurancebrokers, so they've heard of the
broker model and so when youtell someone that, hey, I've got
over a dozen different lendersthat I can shop rates with, I
(02:57):
have a system that will run yourscenario and then it's just
going to tell me who is the bestpriced lender that fits your
specific situation, theyinherently trust your ability to
get them the best rate.
They also now know that you areshopping for them on their
behalf, so that's saving themtime and work.
(03:18):
Now everybody wants to shop fortheir mortgage rate and try and
get the best deal they can get.
That's just a smart thing to do.
But if you can go to a brokerwho can do some of that shopping
for you now, you're saving timeand you're saving money.
So that's huge.
Because what happens then atthat point is a lot of clients
don't shop rates after that.
(03:38):
If you tell them that, hey, I'ma mortgage broker, I'm going to
run this through a dozendifferent lenders and I'm going
to price you with the lenderthat's got the best scenario for
you, they're significantly lesslikely to shop around with
different lenders and getlenders in there.
You're telling them this andthat, and now you're having to
compete with other lenders forthe deal.
So that built in understandingand trust from clients of what
(04:03):
it means to be a broker, I thinkis just as valuable as actually
being able to shop and get thelowest rates and fees.
So when I have that conversationwith clients up front, it
sounds like this hey, mr Smith,I just want to tell you a little
bit about my company.
You know I've been in themortgage business for 18 years.
I started my mortgage company,tiger Home Loans, last year in
(04:25):
October as a mortgage brokerage,and so being a mortgage broker
gives me the ability to shoprates with different lenders.
So I've got over a dozendifferent lenders that I send
loans to, and I'll be able torun your scenario through a
system that prices all thoselenders at the same time.
I'm going to select the onethat has the lowest rates and
(04:46):
fees.
That fits your scenario.
So you're going to get accessto some of the lowest rates in
the marketplace and I'm going toplace you with the lender
that's giving you the best deal.
On top of that, I don't have anyflat fees that I charge at my
company, so most mortgagecompanies charge a flat overhead
fee.
They usually call it like anunderwriting fee.
That's between $1,000 and$1,500.
(05:07):
Like, the last company I was athad an underwriting fee of
$1,495.
I don't have any flat fees atmy company that I charge, so I
can save you, you know, over$1,000 in closing costs in most
scenarios and I can get youaccess to the lowest rates in
the marketplace.
And some of the lenders that Iplace loans with, the only way
(05:28):
you can get a loan through themis through a mortgage broker.
You can't just go directly tothem.
So when I give clients thatspeech, that gives them a huge
amount of confidence thatthey're getting a great deal
financing with me and itsignificantly reduces their need
to shop my quote with otherlenders.
They'll do a quick Googlesearch, see if the rates I'm
quoting them are lower than whatthey see on Google.
(05:50):
They almost always are, andonce they see that then they're
basically good to go.
Now, if I rewind to the lastmortgage company I was at, we
did not have competitive ratesand fees.
We had a $1,500 flat fee and wehad high rates.
So every time I was giving aquote to a client they were
Googling mortgage rates and theywould find that Google pulled
(06:12):
up rates that were lower thanwhat I quoted them.
And then now they'requestioning what I've offered
and they're going out in themarketplace and getting quotes
from other lenders, and so Iwould talk to a ton of clients.
I would do a significantlyfewer number of closed
transactions because clientswould meet with me, they'd like
me, they felt like I was goingto do a great job in the process
, but then when they saw that myrates and fees weren't
(06:33):
competitive, it prompted them togo shop and then I lost tons of
deals.
So that is a humongousadvantage as a mortgage broker,
and my lead to closing ratio hasincreased significantly since
opening my mortgage brokerage.
So number two, let's break thisdown the ability to shop
different lenders.
(06:54):
So you know we just talkedabout why shopping different
lenders can give me, as amortgage broker, access to lower
rates.
Let's now talk about some ofthe advantages of being able to
shop different lenders gives youfrom a perspective of putting
deals together.
So number one different lendershave different underwriting
(07:14):
philosophies, they havedifferent underwriting
management and they havedifferent products.
So let's take just theunderwriting, management and
philosophies side of this.
So I had a client, earlier thisyear.
Actually, who was really at theend of last year?
Without giving you all thedetails of the situation,
basically she was moving fromout of state to Arizona.
(07:37):
She'd been working for the samecompany for 10 years and with
that move from where shepreviously lived to the state of
Arizona, they switched her froma W-2 employee to 1099.
So she became an independentcontractor.
When she applied for a loanwith me she had only been an
independent contractor for fourmonths and most the guidelines
(08:00):
give some gray area with thisfor a VA loan.
But most lenders that I tookthis loan to wanted to see at
least 12 months of history as1099.
Some lenders wanted to see 24months of history as 1099.
One out of the seven lenders Ihave that offer VA loans at that
(08:21):
time reviewed that scenario andsaid actually we would consider
this at less than 12 months ifyou could get us A, b and C.
So we got that paperwork.
We submitted her file intounderwriting upfront before I
had given her a pre-approvalletter.
We had the file reviewed withall that paperwork in it and
(08:42):
then we got the conditionalapproval.
So then I was able to give herthe conditional approval letter.
She went out and shopped forhomes, found a home went under
contract and closed.
So that of the seven lenders Ihad at that time who offered VA
loans, one out of the seven theunderwriting manager looked at
the scenario said, yeah, thatmakes sense to me, we'll do it
(09:04):
if we can have a few additionaldocuments to go with it.
So if I was not a mortgagebroker, the only way I would
have been able to do that dealis if I just got lucky that the
company I was at had the one outof seven underwriting managers
who said, yeah, that deal makessense to me and I was able to
get it done.
But the chances are that Iwouldn't, and then I wouldn't
(09:25):
have any other outlet to send itto you.
So when you work directly for amortgage company, you've got
the one outlet of theunderwriters and underwriting
management that you have at yourcompany.
So being able to shop around canhelp you to get more deals done
in those types of scenarios.
It can also help you get moredeals done just by the fact that
(09:45):
you can get access to so manymore products.
So as a mortgage broker, I cansign up with any lender I wanna
sign up with my company's ingood financial standing.
I meet the criteria for everycompany that you could sign up
with, and so if I ever feel thatI don't have a product that's
important for me to compete inthe marketplace, I can just find
that lender, sign up with themthrough their wholesale channel
(10:07):
and now start to send loans tothem.
It's just as easy as that.
So I have access to a hugesuite of products as a mortgage
broker, which gives me a bigadvantage, and it gives me the
flexibility to get products thatwork for my book of business,
as opposed to being at a bigcompany.
I've just got the products thatthey have at their disposal.
(10:29):
Now, the most mortgage banks.
I'm like the last mortgagecompany that I was at.
We could broker transactions,but the problem is the
independent mortgage bankers.
Their process for brokering isreally tough, and when you don't
practice it, it's usually anightmare when you try and
broker a loan, and so theexperience Brokering loans as an
(10:54):
independent mortgage banker ismuch different than it is when
you have your own mortgagebrokerage.
It's so much easier when youhave your own mortgage brokerage
and you're working withcompanies that specialize in
wholesale lending.
So yeah, technically, if you'rean independent mortgage bank
you have access to to broker outto.
You know, usually thesecompanies have, you know, 10 or
(11:14):
12 lenders that they're approvedwith to broker to, but the
experience is so poor that anytime that I've done that in the
past has been a nightmare andreally not even worth doing
anyway.
So you have more flexibilityfrom a product perspective, more
flexibility to get deals done.
Number three Okay, with all ofthat, if those weren't the big
enough reasons as to why being amortgage broker is so
(11:38):
advantageous, you earn highercommission as a mortgage broker
on top of all of this.
So not only do you have betterrates and fees, you have more
products, you're making more perloan.
So my average commission pertransaction has gone up
significantly.
You know I was making you knowroughly 130 to 150 basis points
(12:00):
at the last company.
I was that you know.
Now I'm making you know nettinglike 200 basis points, and so
it's been a significant increasein pay While providing a better
product for my clients.
And that, to me, is theimportant part.
It's like I don't want to justmake more if I'm gouging my
clients.
I want to provide a reallycompetitive product for my
(12:21):
clients and if I can make morewhile doing it at the same time,
then it's a win-win foreverybody, and that's the case
being a mortgage broker.
So when you, when you're amortgage broker whether you own
your own brokerage or you workat a brokerage You're most
likely going to be anindependent contractor, and so
that gives you some taxadvantages as well.
You can write more off than youcan write off, just as an LO
(12:45):
who's W2 did a mortgage banker,so that gives you some tax
advantages to help shield someof that income.
The journey, because hopefullyyou're earning a ton of income,
but having higher commission perloan means that you can do
Fewer loans and make the sameamount of money, so less hours
to make the same income or youcan continue doing the same
(13:07):
number of loans and earn ahigher amount of money and
significantly increase yourincome, which has been the case
for me, and so you know the thenature of it.
What I found after being amortgage broker now for almost a
year Next month will be myone-year anniversary as a
mortgage broker my quality ofclient that I work with now has
(13:27):
gone up dramatically.
So in the past, the A paperclients, when the companies that
I was at you know the rates.
They ebb and flow right.
So sometimes rates, when ratesare going down and rates are low
, there's not a lot of margincompression and the rates
between companies get fairlysimilar and there's not a ton of
(13:49):
rate shopping and so the ratesaren't as big of an issue.
In an environment like we're inright now, where rates have
been rising, there's a ton ofmargin compression and it's very
competitive and pricing is ahuge issue.
So you know, during thoseenvironments where rates are
going down and the pricing's notas competitive, if you're at a
company that doesn't have thelowest rates, you're still
(14:10):
getting a lot of A paper clientsbecause the rates are good.
Clients aren't having to shopas much because the rates are
going down.
They're excited about the ratethey're being quoted and so you
can get the deals for the betterqualified clients.
When rates move up and we're ina market where there's a lot of
rate shopping going on andmargin compression, then it
(14:30):
becomes much more difficult toget the well qualified A paper
clients unless you have greatrates.
Because it's just so easy toshop rates these days.
All you have to do is jump onGoogle and Google what are
mortgage rates today, and it'sgonna spit out a whole bunch of
options, and so if you're notquoting rates that are in line
with what consumers are seeingonline, you're very unlikely to
(14:54):
get the savvier buyers to gowith you for a transaction.
So what ends up happening isthe people who go with you
oftentimes are the ones who arestruggling to get approved for a
loan, and if you can figure outa way to package it and put it
together, they don't really carewhat the rate is, because
they're just excited to getapproved.
Well, those types of deals,unfortunately, are the hardest
(15:15):
to close because they're clientswho barely qualify.
They usually have a lot ofthings going on in their
finances and so it's a verycumbersome, time intensive deal
to get done For me as a mortgagebroker.
Coming up on one year, myclientele now has significantly
increased to where I'm doingmostly A paper loans, and the
(15:36):
great thing with A paper loansis they're easy to close.
You know the clients are wellorganized, they're well
qualified, they don't have tonsof different things going on
that you've got to address.
They're usually clean, simplefiles to close, and whether the
file is really easy to close orreally hard to close, you get
(15:56):
paid the same amount of moneyeither way.
So when you're commission ahundred percent commission, like
a loan officer, you want toclose those files in as few
hours of work as possible, andso the higher quality of client
you have, the less hours ittakes per deal to close, and so
for me that has been a night andday differences with mortgage
(16:18):
brokers.
Now I'm doing deals for all ofthe A paper clients and there's
so much easier to do.
I think this is one of theeasiest years I've had in terms
of the quality of deals, gettingthem done.
You know it's also been an easyyear because there's just not
as many deals to do right nowbecause the market's been so
difficult.
So that's part of it.
But even if I was doing a lotmore deals, it's taking me so
(16:41):
many less hours per deal toclose because the quality of
clients is so much better.
So those are three of the topreasons why I think being a
mortgage broker is a hugeadvantage, and there's lots of
other reasons as well.
You know those are just three ofthem, but if you're in the
mortgage business or you'reconsidering getting into the
mortgage business, I highly,highly, highly recommend looking
(17:03):
at the mortgage brokerage sideof the business.
It's a great place to be.
There's just so many options.
You're going to maximize yournumber of deals you can get.
You're going to maximize theamount that you make per deal
and your clients are going tolove you because you're getting
them access to the best ratesand fees, and everybody wants to
save money and get a good dealon their mortgage right.
So when you're that conduit,you really build a lot of trust
(17:27):
with your clients and it's easyto build a book of business.
Hope you're doing well.
Thanks for tuning in.
Hey guys, thanks for listening.
I hope you enjoyed the show andgot some valuable information
out of it.
I want to help to educateothers and help people grow
their business and build wealth,and I can only do that with
referrals and your help gettingthe word out about this podcast.
(17:49):
So if you come across someoneyou think of benefit from this,
please share it with them.
And if there's somebody whocomes in mind, a five star
review would go a long way inhelping me to grow this podcast
and grow the brand.
So appreciate your support.
Welcome to the show fairways and finance.
My name is Jeff Smith.
I've been in the mortgagebusiness for 16 years top
quarter percent L O nationwide.
And you know this podcast.
We want to talk about yourfinances, how to grow and
accumulate wealth and all thingsrelated to the mortgage
industry.
But we're golf lovers here aswell, so we're going to work in
some golf.
Don't worry for my golf loversout there.
(00:26):
We got you and I hope you enjoythe show.
Hey, welcome back to the show.
Everyone, jeff Smith, your host,and excited to talk to you
today about being a mortgagebroker.
And today you all want to keepthis fairly simple and go
through what I believe are thethree top reasons why you should
(00:47):
be a mortgage broker versus amortgage banker or working in a
depository banker or any otherkind of institution where you
can do financing for mortgages.
And so the top three reasons Ibelieve that being a mortgage
broker is the best place to beis number one client perception
as it relates to interest rateand fees, and then actually
(01:10):
having the lowest interest ratesand fees so those two go hand
in hand together the ability toshop rates with different
lenders and then hire commission.
So let's break down each ofthose three and why I think
they're so important.
So number one within theindustry, we know that brokers
have lower rates and they havelower fees compared to
(01:33):
independent mortgage bankingcompanies, compared to most of
the depository banks andcompared to most of the I would
call them centralized directlenders like a rocket mortgage.
So mortgage brokers have thisadvantage when it comes to lower
interest rates and, like at mycompany, for example, I don't
have any flat fees that I charge.
(01:54):
So most mortgage companiescharge a flat they usually call
it an underwriting fee or aprocessing fee somewhere between
$1,000 and $1,500.
So at my company I can getaccess to the lowest rates by
shopping with different lendersand I don't have any lender fees
.
So right off the bat, that's ahuge savings for my clients and
(02:15):
that can be measured against anyother lender and consistently
I've got some of the bestpricing out there.
So that is real.
Now what I think is even moreof an advantage than the fact
that I do have the lowest ratesand fees is that I can explain
that to clients and clientsunderstand what it means to be a
(02:35):
broker.
So clients, even if they haven'tbought a mortgage before,
financed a mortgage before.
They've worked with brokers insome other capacity.
A lot of times it's insurancebrokers, so they've heard of the
broker model and so when youtell someone that, hey, I've got
over a dozen different lendersthat I can shop rates with, I
(02:57):
have a system that will run yourscenario and then it's just
going to tell me who is the bestpriced lender that fits your
specific situation, theyinherently trust your ability to
get them the best rate.
They also now know that you areshopping for them on their
behalf, so that's saving themtime and work.
(03:18):
Now everybody wants to shop fortheir mortgage rate and try and
get the best deal they can get.
That's just a smart thing to do.
But if you can go to a brokerwho can do some of that shopping
for you now, you're saving timeand you're saving money.
So that's huge.
Because what happens then atthat point is a lot of clients
don't shop rates after that.
(03:38):
If you tell them that, hey, I'ma mortgage broker, I'm going to
run this through a dozendifferent lenders and I'm going
to price you with the lenderthat's got the best scenario for
you, they're significantly lesslikely to shop around with
different lenders and getlenders in there.
You're telling them this andthat, and now you're having to
compete with other lenders forthe deal.
So that built in understandingand trust from clients of what
(04:03):
it means to be a broker, I thinkis just as valuable as actually
being able to shop and get thelowest rates and fees.
So when I have that conversationwith clients up front, it
sounds like this hey, mr Smith,I just want to tell you a little
bit about my company.
You know I've been in themortgage business for 18 years.
I started my mortgage company,tiger Home Loans, last year in
(04:25):
October as a mortgage brokerage,and so being a mortgage broker
gives me the ability to shoprates with different lenders.
So I've got over a dozendifferent lenders that I send
loans to, and I'll be able torun your scenario through a
system that prices all thoselenders at the same time.
I'm going to select the onethat has the lowest rates and
(04:46):
fees.
That fits your scenario.
So you're going to get accessto some of the lowest rates in
the marketplace and I'm going toplace you with the lender
that's giving you the best deal.
On top of that, I don't have anyflat fees that I charge at my
company, so most mortgagecompanies charge a flat overhead
fee.
They usually call it like anunderwriting fee.
That's between $1,000 and$1,500.
(05:07):
Like, the last company I was athad an underwriting fee of
$1,495.
I don't have any flat fees atmy company that I charge, so I
can save you, you know, over$1,000 in closing costs in most
scenarios and I can get youaccess to the lowest rates in
the marketplace.
And some of the lenders that Iplace loans with, the only way
(05:28):
you can get a loan through themis through a mortgage broker.
You can't just go directly tothem.
So when I give clients thatspeech, that gives them a huge
amount of confidence thatthey're getting a great deal
financing with me and itsignificantly reduces their need
to shop my quote with otherlenders.
They'll do a quick Googlesearch, see if the rates I'm
quoting them are lower than whatthey see on Google.
(05:50):
They almost always are, andonce they see that then they're
basically good to go.
Now, if I rewind to the lastmortgage company I was at, we
did not have competitive ratesand fees.
We had a $1,500 flat fee and wehad high rates.
So every time I was giving aquote to a client they were
Googling mortgage rates and theywould find that Google pulled
(06:12):
up rates that were lower thanwhat I quoted them.
And then now they'requestioning what I've offered
and they're going out in themarketplace and getting quotes
from other lenders, and so Iwould talk to a ton of clients.
I would do a significantlyfewer number of closed
transactions because clientswould meet with me, they'd like
me, they felt like I was goingto do a great job in the process
, but then when they saw that myrates and fees weren't
(06:33):
competitive, it prompted them togo shop and then I lost tons of
deals.
So that is a humongousadvantage as a mortgage broker,
and my lead to closing ratio hasincreased significantly since
opening my mortgage brokerage.
So number two, let's break thisdown the ability to shop
different lenders.
(06:54):
So you know we just talkedabout why shopping different
lenders can give me, as amortgage broker, access to lower
rates.
Let's now talk about some ofthe advantages of being able to
shop different lenders gives youfrom a perspective of putting
deals together.
So number one different lendershave different underwriting
(07:14):
philosophies, they havedifferent underwriting
management and they havedifferent products.
So let's take just theunderwriting, management and
philosophies side of this.
So I had a client, earlier thisyear.
Actually, who was really at theend of last year?
Without giving you all thedetails of the situation,
basically she was moving fromout of state to Arizona.
(07:37):
She'd been working for the samecompany for 10 years and with
that move from where shepreviously lived to the state of
Arizona, they switched her froma W-2 employee to 1099.
So she became an independentcontractor.
When she applied for a loanwith me she had only been an
independent contractor for fourmonths and most the guidelines
(08:00):
give some gray area with thisfor a VA loan.
But most lenders that I tookthis loan to wanted to see at
least 12 months of history as1099.
Some lenders wanted to see 24months of history as 1099.
One out of the seven lenders Ihave that offer VA loans at that
(08:21):
time reviewed that scenario andsaid actually we would consider
this at less than 12 months ifyou could get us A, b and C.
So we got that paperwork.
We submitted her file intounderwriting upfront before I
had given her a pre-approvalletter.
We had the file reviewed withall that paperwork in it and
(08:42):
then we got the conditionalapproval.
So then I was able to give herthe conditional approval letter.
She went out and shopped forhomes, found a home went under
contract and closed.
So that of the seven lenders Ihad at that time who offered VA
loans, one out of the seven theunderwriting manager looked at
the scenario said, yeah, thatmakes sense to me, we'll do it
(09:04):
if we can have a few additionaldocuments to go with it.
So if I was not a mortgagebroker, the only way I would
have been able to do that dealis if I just got lucky that the
company I was at had the one outof seven underwriting managers
who said, yeah, that deal makessense to me and I was able to
get it done.
But the chances are that Iwouldn't, and then I wouldn't
(09:25):
have any other outlet to send itto you.
So when you work directly for amortgage company, you've got
the one outlet of theunderwriters and underwriting
management that you have at yourcompany.
So being able to shop around canhelp you to get more deals done
in those types of scenarios.
It can also help you get moredeals done just by the fact that
(09:45):
you can get access to so manymore products.
So as a mortgage broker, I cansign up with any lender I wanna
sign up with my company's ingood financial standing.
I meet the criteria for everycompany that you could sign up
with, and so if I ever feel thatI don't have a product that's
important for me to compete inthe marketplace, I can just find
that lender, sign up with themthrough their wholesale channel
(10:07):
and now start to send loans tothem.
It's just as easy as that.
So I have access to a hugesuite of products as a mortgage
broker, which gives me a bigadvantage, and it gives me the
flexibility to get products thatwork for my book of business,
as opposed to being at a bigcompany.
I've just got the products thatthey have at their disposal.
(10:29):
Now, the most mortgage banks.
I'm like the last mortgagecompany that I was at.
We could broker transactions,but the problem is the
independent mortgage bankers.
Their process for brokering isreally tough, and when you don't
practice it, it's usually anightmare when you try and
broker a loan, and so theexperience Brokering loans as an
(10:54):
independent mortgage banker ismuch different than it is when
you have your own mortgagebrokerage.
It's so much easier when youhave your own mortgage brokerage
and you're working withcompanies that specialize in
wholesale lending.
So yeah, technically, if you'rean independent mortgage bank
you have access to to broker outto.
You know, usually thesecompanies have, you know, 10 or
(11:14):
12 lenders that they're approvedwith to broker to, but the
experience is so poor that anytime that I've done that in the
past has been a nightmare andreally not even worth doing
anyway.
So you have more flexibilityfrom a product perspective, more
flexibility to get deals done.
Number three Okay, with all ofthat, if those weren't the big
enough reasons as to why being amortgage broker is so
(11:38):
advantageous, you earn highercommission as a mortgage broker
on top of all of this.
So not only do you have betterrates and fees, you have more
products, you're making more perloan.
So my average commission pertransaction has gone up
significantly.
You know I was making you knowroughly 130 to 150 basis points
(12:00):
at the last company.
I was that you know.
Now I'm making you know nettinglike 200 basis points, and so
it's been a significant increasein pay While providing a better
product for my clients.
And that, to me, is theimportant part.
It's like I don't want to justmake more if I'm gouging my
clients.
I want to provide a reallycompetitive product for my
(12:21):
clients and if I can make morewhile doing it at the same time,
then it's a win-win foreverybody, and that's the case
being a mortgage broker.
So when you, when you're amortgage broker whether you own
your own brokerage or you workat a brokerage You're most
likely going to be anindependent contractor, and so
that gives you some taxadvantages as well.
You can write more off than youcan write off, just as an LO
(12:45):
who's W2 did a mortgage banker,so that gives you some tax
advantages to help shield someof that income.
The journey, because hopefullyyou're earning a ton of income,
but having higher commission perloan means that you can do
Fewer loans and make the sameamount of money, so less hours
to make the same income or youcan continue doing the same
(13:07):
number of loans and earn ahigher amount of money and
significantly increase yourincome, which has been the case
for me, and so you know the thenature of it.
What I found after being amortgage broker now for almost a
year Next month will be myone-year anniversary as a
mortgage broker my quality ofclient that I work with now has
(13:27):
gone up dramatically.
So in the past, the A paperclients, when the companies that
I was at you know the rates.
They ebb and flow right.
So sometimes rates, when ratesare going down and rates are low
, there's not a lot of margincompression and the rates
between companies get fairlysimilar and there's not a ton of
(13:49):
rate shopping and so the ratesaren't as big of an issue.
In an environment like we're inright now, where rates have
been rising, there's a ton ofmargin compression and it's very
competitive and pricing is ahuge issue.
So you know, during thoseenvironments where rates are
going down and the pricing's notas competitive, if you're at a
company that doesn't have thelowest rates, you're still
(14:10):
getting a lot of A paper clientsbecause the rates are good.
Clients aren't having to shopas much because the rates are
going down.
They're excited about the ratethey're being quoted and so you
can get the deals for the betterqualified clients.
When rates move up and we're ina market where there's a lot of
rate shopping going on andmargin compression, then it
(14:30):
becomes much more difficult toget the well qualified A paper
clients unless you have greatrates.
Because it's just so easy toshop rates these days.
All you have to do is jump onGoogle and Google what are
mortgage rates today, and it'sgonna spit out a whole bunch of
options, and so if you're notquoting rates that are in line
with what consumers are seeingonline, you're very unlikely to
(14:54):
get the savvier buyers to gowith you for a transaction.
So what ends up happening isthe people who go with you
oftentimes are the ones who arestruggling to get approved for a
loan, and if you can figure outa way to package it and put it
together, they don't really carewhat the rate is, because
they're just excited to getapproved.
Well, those types of deals,unfortunately, are the hardest
(15:15):
to close because they're clientswho barely qualify.
They usually have a lot ofthings going on in their
finances and so it's a verycumbersome, time intensive deal
to get done For me as a mortgagebroker.
Coming up on one year, myclientele now has significantly
increased to where I'm doingmostly A paper loans, and the
(15:36):
great thing with A paper loansis they're easy to close.
You know the clients are wellorganized, they're well
qualified, they don't have tonsof different things going on
that you've got to address.
They're usually clean, simplefiles to close, and whether the
file is really easy to close orreally hard to close, you get
(15:56):
paid the same amount of moneyeither way.
So when you're commission ahundred percent commission, like
a loan officer, you want toclose those files in as few
hours of work as possible, andso the higher quality of client
you have, the less hours ittakes per deal to close, and so
for me that has been a night andday differences with mortgage
(16:18):
brokers.
Now I'm doing deals for all ofthe A paper clients and there's
so much easier to do.
I think this is one of theeasiest years I've had in terms
of the quality of deals, gettingthem done.
You know it's also been an easyyear because there's just not
as many deals to do right nowbecause the market's been so
difficult.
So that's part of it.
But even if I was doing a lotmore deals, it's taking me so
(16:41):
many less hours per deal toclose because the quality of
clients is so much better.
So those are three of the topreasons why I think being a
mortgage broker is a hugeadvantage, and there's lots of
other reasons as well.
You know those are just three ofthem, but if you're in the
mortgage business or you'reconsidering getting into the
mortgage business, I highly,highly, highly recommend looking
(17:03):
at the mortgage brokerage sideof the business.
It's a great place to be.
There's just so many options.
You're going to maximize yournumber of deals you can get.
You're going to maximize theamount that you make per deal
and your clients are going tolove you because you're getting
them access to the best ratesand fees, and everybody wants to
save money and get a good dealon their mortgage right.
So when you're that conduit,you really build a lot of trust
(17:27):
with your clients and it's easyto build a book of business.
Hope you're doing well.
Thanks for tuning in.
Hey guys, thanks for listening.
I hope you enjoyed the show andgot some valuable information
out of it.
I want to help to educateothers and help people grow
their business and build wealth,and I can only do that with
referrals and your help gettingthe word out about this podcast.
(17:49):
So if you come across someoneyou think of benefit from this,
please share it with them.
And if there's somebody whocomes in mind, a five star
review would go a long way inhelping me to grow this podcast
and grow the brand.
So appreciate your support.
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