How do banks, savings and loans, and mortgage bankers make their money on mortgage loans?
As you would expect, everyone involved in a loan makes money by charging interest or fees. There are generally three levels between the borrower and the actual money borrowed: the retail lender, the wholesale lender, and the actual source of the funds. The source of the funds for the loan charges interest and points for the money borrowed, and the wholesale and retail lenders charge points and fees for their services. The sum of the charges result in the interest, points and fees paid by the borrower over the life of the loan.