How Much Is My Loan Officer Charging Me?

Question:

How much money does your loan officer stand to make for helping you with your loan?

Answer:

As much as he wants.

What I Learned in College

While in school, one of my fellow students in our Business Negotiations class raised her hand one day with an interesting question as we were discussing the topic of interviewing for our first jobs right out of college.

“How much money do I ask my prospective employer to pay me?” she asked.

My professors reply:

“Here is how you can find the answer to that question. Go home tonight and look in the mirror.

Role play and have your roommate ask you the question of ‘what are your salary expectations’.

Start by answering with $50,000 and then look in the mirror.

If you can say $50,000 with a straight face, have her ask you the question again — ‘what are your salary expectations’ — go up $5,000 to $55,000 and watch your own face.

If you keep a straight face at $55,000, have her ask you the ‘what are your salary expectations’ again and move up another $5,000 to $60,000.

If you keep a straight face at $60,000, move up to $65,000.

At some point, you are going to answer that question with a number that you absolutely-can’t-keep-a-straight-face-anymore and now you have your answer…

You just asked for too much money, go back $5,000 and that is how much you ask for.”

My First Day Being A Loan Officer: How Much Do I Charge?

Fast forward to my first day in the mortgage business a few years later. When I started working in the business, I had obtained multiple mortgages for myself and I thought I knew at least a little about them so I asked my trainer how much I was supposed to charge for my services.

“As much as you want” was his reply.

And no less than thousands of loan officers were trained in very similar ways.

How You Can Avoid Paying ‘As Much As Your Loan Officer Wants’

Even though various regulators have come up with a “new and improved” or at least standardized way of disclosing loan terms and fees to consumers with the updated Good Faith Estimate starting January 1, 2010, there is still a way that you can reduce your risk of paying as much as your loan officer wants… it is called the Zillow Mortgage Marketplace.

The idea behind Zillow’s Mortgage Marketplace is to give consumers the best possible view into overall fees and rates based on their individual situation - and then allow the consumer to choose which lender to work with after seeing all of the mortgage quotes.

It essentially takes the choice of how much a loan officer stands to make away from the loan officer and puts it directly into your hands.

Because transparency is a beautiful thing… unless you happen to be a loan officer trying not to smile.

February 24, 2009