A mortgage broker helps borrowers obtain mortgage financing from wholesale mortgage lending companies. For their services, brokers are paid a fee by the borrower or a yield spread premium (commission) by the lender.
Mortgage brokers have access to products from more than one lender, while loan officers who work directly for a mortgage lender can only sell the products offered by that company. For borrowers with some challenges or unusual requests (credit issues, or trying to purchase non-standard properties, for example), mortgage brokers may be better equipped to find a willing lender.
However, because brokers are not employees of the actual lender, they do not have the same control over a mortgage application that a loan officer working within an organization might. Direct lenders may be able to work faster when time is a concern. And one HUD study found that brokered loans had higher costs than loans from direct lenders or banks, so brokers might not always be the lowest-cost choice.
Today, thought, it’s so easy to compare multiple mortgage quotes from both direct lenders and brokers that the distinction doesn’t matter as much. Borrowers can complete a short request and receive custom home loan quotes from competing brokers and lenders, or they can fill in a few blanks at LoanExplorer by LendingTree and view real-time offers – all with no obligation or cost.