What is the difference between a Mortgage Broker and a Lender?
A lender will work with you directly to transact the loan and provides the money to the borrower at closing. Lenders who perform all the loan origination functions are called ‘retail lenders’. Mortgage Brokers do not lend. They are independent contractors who offer the loan products of multiple lenders, called wholesalers. They work with potential customers and counsel them on loans available from a variety of lenders. Once they’ve started the process with the consumer and the file is complete, it is handed off to the lender who funds the loan.
A mortgage broker counsels you on the loans available from different wholesalers, takes your application, and usually processes the loan which involves putting together the complete file of information about your transaction including the credit report, appraisal, verification of your employment and assets, and so on. When the file is complete, but sometimes sooner, the lender “underwrites” the loan, which means deciding whether or not you are an acceptable risk.
Related Questions
- How does a mortgage loan originator working for a licensed mortgage lender or mortgage broker meet the requirement to be covered by a surety bond?
- Does a mortgage broker or lender need to be a FHA approved lender to originate a single family loan that is subsequently insured by FHA?
- What is the job of the mortgage broker?
