Mortgage Broker

A mortgage banker is an individual or organization that acts as an intermediary between borrower and lender to originate a mortgage loan. The term mortgage broker is often confused with a mortgage banker, but unlike the mortgage banker, the mortgage broker does not lend its own funds. The bank typically pays the mortgage broker for finding and processing the loan. Mortgage broker compensation of about 1% of the loan principal is typical. This payment is divided between the loan officer, who usually works only on commission, and other expenses of the brokerage. The borrower can get a competitively priced mortgage through a mortgage broker because the bank usually offers its loans at wholesale rates to the mortgage broker, rather than the retail rate it offers direct to the borrower. The borrower also benefits because the mortgage broker easily shop multiple lenders. An upfront mortgage broker offers a more transparent compensation. In exchange for a fee paid by the borrower, the upfront mortgage broker arranges for the borrower to get the loan at the wholesale interest rate.