I was chatting with some guys the other day. They appear to be in their mid twenties, and have moved from Long Island into a 1.5 million dollar house in Maryland. They are mortgage brokers. Why they are fleeing New York belongs in another forum, but this is a factual question. Assuming they made their money selling instruments like option ARM’s in the hot New York real estate market, my question is this: What kind of commisions does a mortgage broker get, and what kind of commision/bonus differential is there between standard 15 or 30 year mortgages and the chancier stuff like option ARM’s that have become so popular lately?
Of course it varies from lender to lender, but at one of my previous employers, we paid a maximum of about 3% of the loan amount for Option ARMS as opposed to a maximum of about 2% of the loan amount for fixed rate loans. At an average loan size of about 350k, that comes out to 10k vs. 7k per loan.