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Top Expenses of a Mortgage Loan Originator
November 30, 2021

Top Expenses of a Mortgage Loan Originator

by The CE Shop Team

Learn About MLO Fees and Expenses

If you’re interested in a career in the mortgage industry, you probably like to keep your money top of mind - and that perspective can help you excel as a Mortgage Loan Originator (MLO). As you learn more about the fast-paced world of the loan approval process, it’s crucial to understand the expenses attached to following this career path. This guide will outline the average cost of becoming an MLO to help you stay on top of your finances.

Before we jump into how much you should expect to pay, let’s reflect on what you stand to earn as an MLO. Not only do Mortgage Loan Originators enjoy excellent job security, but their annual income varies depending on how many hours they dedicate to working, the mortgage rates in the area, and their commission agreement. In other words, MLOs have the unique ability to earn a hefty paycheck. As of 6/21/2021, the average salary of a Mortgage Loan Originator ranges from $75,141 - $88,776 per year before commissions. With a near-unlimited earning potential on the horizon, let’s break down the initial investment required to become an MLO.

Brokerage Fees

Once you’ve passed your licensing exam and become an MLO, you must find a sponsor that is an NMLS-licensed entity. In other words, the bank or mortgage company for which you are working must sponsor you and oversee your activities. In the real estate industry, there are brokerage fees associated with working under a brokerage. This is not the case in the mortgage industry, where there is often no brokerage fee required to work under a brokerage. Working for a brokerage secures many perks you won’t find when opening your own firm, such as a referral network, insurance benefits, and marketing support.

If you are working for a larger entity, like a bank, you’ll often be offered a base salary, a commission agreement, and insurance benefits. When working for a smaller business, you will rely more on commissions to make up your pay. As an MLO, you are able to negotiate your commission agreement and should expect to earn more the longer you are in the field. When starting out, it is important to understand all of the costs and benefits in your contract.

The typical MLO is paid 1% of the loan amount in commission. On a $500,000 loan, a commission of $5,000 is paid to the brokerage, and the MLO will get the commission percentage they have negotiated. If the commission for the MLO is 80%, they will receive $4,000 of the $5,000 brokerage commission.

MLO Top Expenses

Operational Fees

If, as an MLO, you are working for a bank or credit union, you will have most of your operational costs covered by your employer. If you work for a mortgage lender or Mortgage Broker, you will generally cover all of your own costs. Some lenders will charge a monthly office fee to cover the expense of things like a receptionist, space rental, paper, ink, and electricity, usually around $50 per month.

Another expense MLOs will see is in buying referral lists. If you start for a company that doesn’t have a base from which to generate referrals, they may have to purchase those referrals or subscriptions to companies that generate leads. Most banks will already have a customer base to solicit from. You’ll also want to take into consideration becoming a part of an industry organization like the Mortgage Bankers Association, which gives you a chance to network, go to conferences, and advocate for yourself and others in the real estate finance industry.

Marketing and Advertising

A large part of being a Mortgage Loan Originator is marketing and advertising yourself, which can be a large expense. Many MLOs will sponsor speakers, have giveaway items, business cards, and provide food and beverages. Starting out in the industry these expenses will be your responsibility, but as you progress in your career there is a chance that your lender will help compensate you, with top performers earning $5,000-$7,000 per quarter to put towards marketing. Here are some other marketing materials you can expect to add to your expenses:

  • Flyers
  • Business Cards
  • Personal Website
  • Direct Mail
  • Internet Ads

Career Development

Becoming a Mortgage Loan Originator requires initial Pre-Licensing coursework and yearly Continuing Education. This education is available to take in a classroom, or there are online courses available for those looking for a more flexible class schedule. Here are some estimates for what you should expect to spend to get and maintain your license:

Pro tip: If you’re looking to boost your earning potential, there are certifications available to Mortgage Loan Originators. The Mortgage Bankers Association (MBA) is a great resource that provides extra mortgage education including webinars, certificates, and designations. A certificate or designation through MBA’s School of Mortgage Banking costs just under $3,000. 

MLO Top Expenses 2

While it’s important to budget for each of these expenses as you prepare for your new career, they comprise only a small percentage of the average MLO’s income. These initial investments open the door to a career with excellent job security, high earning potential, and the ability to make people’s dreams of homeownership come true. And, with online coursework available, it’s never been more convenient or straightforward to become an MLO.

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