What Is A Mortgage Broker?

Mortgage brokers are individuals or companies (depending on which state you are from) that have a state license to arrange mortgages. To set the record straight, in this article, the term Mortgage Broker refers to a company, not an individual. Individuals who work for mortgage brokers are: loan officers, processors, assistant processors, telemarketers, loan specialists, etc.

What Is A Mortgage Broker? They Arrange Mortgages
Mortgage brokers do not loan the money for a mortgage; they only arrange loans for their customers with different mortgage lenders. Typically, mortgage brokers have relationships with quite a few mortgage lenders which give the mortgage broker a tremendous amount of flexibility in finding competitive loan programs for their customers.
The term mortgage broker is used very loosely in the real estate community. You can think of a mortgage broker just like your local bank – you go to the bank to cash checks and deposit money in to your bank account. The person who helps you do this is the bank teller. In this example, the mortgage broker is like the bank, it’s a company with a license to arrange – broker – loans.

Mortgage Brokers Are Companies Where Loan Officers and Processors Work
Loan officers are like bank tellers in that they work for a mortgage broker just like the bank teller works for the bank. Loan officers arrange loans for their customers under their mortgage broker’s license, but the mortgage broker is the one who is licensed and a loan officer works for the mortgage broker. A loan officer can work for either a mortgage broker or a mortgage lender or a bank.

Can Be Licensed in Multiple States
Some mortgage brokers are licensed in multiple states and some even have their licenses for all 50 states. Mortgage brokers help consumers who want home loans for either purchasing a new home, or refinancing their homes. Mortgage brokers can also help arrange first mortgages, second mortgages, home equity lines of credit, commercial mortgages, reverse mortgages, and hard money loans. Some states require mortgage brokers to have extra licenses to arrange second mortgages and home equity lines of credit – HELOC. Typically mortgage brokers can go to any number of mortgage lenders to get loans for their customers.

Some Mortgage Brokers Are FHA Approved
One additional license that a mortgage broker can has is a federal license from the Federal Housing Administration – FHA – to do FHA mortgages. Mortgage brokers have to go through an extensive licensing process to get their “Mini-Eagle” which allows them to broker FHA loans. The term Mini-Eagle is a term that FHA calls the license that mortgage brokers can get. If you are looking for an FHA loan to buy a home, or refinance your ARM or Fixed Mortgage you need to make sure that the mortgage company or mortgage broker that you speak to is an FHA approved lender.