A mortgage broker is one of several sources that homebuyers can use to obtain a mortgage.
Mortgage brokers work with multiple lenders, also known as wholesalers, to offer loan products to homebuyers.
When you work with a mortgage broker, he does the initial steps of the loan process: completing the application, obtaining your credit report, conducting the appraisal, verifying your employment, etc.
After the broker completes these steps the lender conducts the underwriting process in which your risk as a borrower is determined.
When the loan closes, you will no longer work with the mortgage broker. Instead, you work with the lender.
These wholesale lenders quote brokers a wholesale price for the loan. The mortgage broker then decides the price to offer to you.
The price you are quoted by the mortgage broker often includes some type of markup, usually in the form of points. Each point is one percent of the total loan amount.
So if the mortgage broker charges 1 point on a $100,000 loan, he received $1,000. Keep in mind that the number of points the broker charges is in addition to interest charged by the loan provider.
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