Definition
Mortgage brokers act as intermediaries between you and wholesale lenders, shopping your loan and arranging financing. They earn compensation through origination fees or lender yield spread premiums. They provide access to multiple lenders but may have compensation conflicts.
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Find my pathAbout this term
Mortgage brokers don't lend money directly; they work with wholesale lenders to find loan options. Brokers earn compensation through origination fees, yield spread premiums, or lender fees. They can provide access to multiple lenders and loan programs but may have conflicts of interest in compensation structures.
Pro Tip
Working with a broker can provide access to multiple lenders; ensure you understand their compensation and that they're acting in your interest.
Example
A mortgage broker shops a borrower's loan to 5 different lenders, comparing terms and rates before recommending the best option.