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Borrower Paid Compensation

There are two options borrowers have when it comes to loan originator compensation: lender paid and borrower paid. Both of these options are available on all home loan programs.

The borrower paid compensation model means the borrower will be responsible for paying the loan originators fee for service. A firm condition of the borrower paid model is absolutely no part of the credit generated by the interest rate can be used to pay the loan originators fee for service, it must be paid entirely by the borrower. You can use credit generated by the interest rate to pay any and all third party fees associated with closing.

The primary benefits of the borrower paid model is you are allowed to negotiate the loan originators fee for service, and because it is not built into the interest rate and pricing, the rate and pricing for the borrower paid model will be better than the rate and pricing quoted in the lender paid model. Consequently you typically are able to secure a lower rate in the borrower paid model.

The disadvantage of the borrower paid model is because the borrower has to pay for the loan originators fee for service, you cannot accomplish a no cost loan, the best you can do is pay all the third party fees and reoccurring charges and accomplish a low cost loan. You should review the price vs. cost article for more information on this subject.

Due to compensation requirements relating to borrow paid loans, and the originator not all lenders offer them to their clients. If you are paying any closing costs regardless of the compensation model (lender paid or borrower paid) you should look into the borrower paid option. 

If the lender you are currently work with does not offer the borrower paid model as an option, we suggest you get a second opinion from a lender that does offer borrower paid options. 

Culture Mortgage believes in providing our clients as many options as possible and is proud to offer the borrower paid compensation model.

If you have questions, give us a call today or email us.


California Bureau of Real Estate License 01792241
NMLS License 523235

1649 Calavo Rd. Fallbrook, CA 92028
831.325.6959 Phone
866.321.5467 Fax

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