Mortgage Originator and Mortgage Broker – What’s the Difference?

If this question came up in a pop quiz — What’s the difference between a mortgage originator and a mortgage broker? — would you know how to respond?
If you know the answer, kudos to you. But if you’re like many people, you probably don’t have a clue. Not to worry, though. We can help you ace this question right here!

A mortgage originator is either a financial institution or an individual employed by a financial institution who works with a borrower to complete a mortgage transaction. A mortgage originator may also be referred to as a loan officer.

A mortgage broker, on the other hand, does not lend money or represent a financial institution that lends money. Instead, a broker serves as an intermediary who finds a lender and mortgage option that best matches the needs of a borrower. Think of a broker as an independent contractor who works with various funding sources on behalf of their client.

Another difference between a mortgage originator and a broker is that, typically, a broker is paid directly by the borrower, whereas the originator is paid by the firm they work for. Usually a broker gets paid a percentage of the final loan value.

The broker gathers financial information from a borrower before beginning the search for the most appropriate lender and loan option. Depending on the broker’s relationships with lenders, however, they may be limited in their reach to find a best match.

A mortgage originator’s loan options for the borrower are dependent on what’s available from the institution they work for. Since there is no “middle man” in this scenario, loans often can be processed quicker than when working with a broker.

Think of it like buying a car. If you finance the auto through the dealership, the dealership gets offers from multiple financial institutions but the car dealer is not employed by any of those financial institutions.  If you finance through a bank, you are most likely dealing directly with the organization that will make and service your loan.

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