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Lender Paid Compensation

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

The lender paid compensation model means the lender will pay the loan originators fee for service. This fee for service is predetermined between the lender and the broker, and cannot be changed. For this reason a borrower cannot negotiate a lenders fee for service if they are paying the loan originators fee for service through the lender paid compensation model. The fee for service paid by the lender to the loan originator is built into the interest rate and pricing quoted.

Because the fee for service is being paid by the lender and you can generate credit by accepting rates that offer credit back, the lender paid compensation model is the only way a no cost loan can be accomplished. For more information on this review the price vs. cost article.

You should always consider the spread between interest rates to determine if the no cost benefit of lender paid is cost effective. If it is not you may want to consider the borrower paid compensation model.

Lender paid compensation is how the vast majority of lenders operate and compensate their loan originators. There is nothing wrong with this, just recognize there is an alternative option available which may be more cost effective. If the lender you are considering does not bring to your attention or offer the borrower paid compensation model, you may want to consider reviewing your options with a lender that does.

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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