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What Is a Mortgage Broker?

A mortgage broker is a liaison officer or intermediary who helps homebuyers find the best mortgage and lender for their financial circumstances. As a mortgage broker, you'll work with lenders to identify the terms and rates that best suit your client's (the mortgage borrower) needs.

Buying a house can be a complex process, and many buyers aren't fully equipped to identify the right mortgage for them. They may need help understanding timelines, interest rates, fees, and terms. A mortgage broker's guidance can help make the process of buying a home less stressful and easier to navigate. 

Real Estate brokers discussing RESPA and risk management

What Does a Mortgage Broker Do?

A mortgage broker's primary responsibility is to educate their clients about different mortgage options and help them choose the best path. However, brokers can serve their clients in the following ways: 

  • Support clients with preapproval where possible 
  • Help clients put together essential documentation for a mortgage (paystubs, tax paperwork, bank statements, a credit report, etc.) 
  • Assist clients with filling out their mortgage application form 
  • Review the finished application and submit it to the mortgage lender 
  • Explain any pertinent legal disclosures to the client 

Benefits of Working With a Mortgage Broker

There are many benefits to working with mortgage brokers. A mortgage broker provides invaluable insight and expertise and simplifies the process of selecting the best mortgage. They research the different mortgages available to a buyer and provide well-researched comparisons that save a buyer's time and effort. They may introduce borrowers to new lenders or help them disqualify lenders that don't offer a suitable mortgage option. Mortgage brokers can also help clients save money through fee waivers and better loan rates. 

Mortgage Brokers vs. Loan Officers

Both mortgage brokers and mortgage loan officers support borrowers with their mortgage process. However, they have different duties and responsibilities. The key differences between these parties are as follows: 

  • Affiliation: A mortgage broker is an independent entity, while a loan officer works for the lender. 
  • Mortgage Expertise: A mortgage broker can research and provide information about different lenders and their mortgage products. However, a loan officer is best placed to provide information about the lender they work for and the mortgages that their employer offers. 
  • Duties: While a mortgage broker can help you apply for the loan, they have no say in approval and processing. A loan officer typically evaluates the applicant's financial information, approves applications, or refers applications to management for approval or review. 

What Is the Average Salary for a Mortgage Broker?

How mortgage brokers are paid depends on their type of employment. If you join a firm, you may have a monthly salary. However, most independent mortgage brokers earn a commission on each mortgage they help process. Typically, the commission is 1% to 2% of the loan sum. A mortgage broker may be paid by the buyer or the lender, but not both. 

Currently, the average mortgage broker salary (Credit Intermediation and Related Activities) in the country is around $85,190, according to the Bureau of Labor Statistics. Pay may be impacted by many factors, including experience, qualifications, or even the state or region you work in. By comparison, the median annual income for a loan officer as of May 2022 was $65,740. 

Agent showing home interior to clients

Can You Be a Mortgage Broker and a Real Estate Agent?

Real estate agents can expand their career and earning potential by providing mortgage brokering services. As a real estate agent, you already understand your client's budget and their needs. By becoming a mortgage broker, you can help them find the right mortgage and enable them to purchase their dream home. 

Just as real estate agents take a pre-licensing course and license exam to get their real estate agent license, aspiring mortgage brokers must take pre-licensing training and take the National Mortgage License System (NMLS) Test to be eligible for their mortgage broker license. 

Real estate agents generally liaise between home buyers and sellers; a mortgage broker works with mortgage borrowers and lenders. Though these are distinct roles, there are some important facts to bear in mind. 

  • Mortgage brokers can't arrange FHA loans on transactions where they're also the real estate agent. 
  • Some secondary mortgage buyers may refuse transactions in which a real estate agent is also the mortgage broker. 
  • Rules on performing both roles in a transaction may differ by state. Some states may require an additional clause in the contract that clearly outlines the arrangement. Others may not permit one individual to be both the real estate agent and the mortgage broker for the same real estate transaction. 

Getting a mortgage brokering license can help real estate agents educate their clients while providing more comprehensive services. You can also further your professional development and serve your clients by becoming a REALTOR®, a member of the National Association of REALTORS®, and adhering to the REALTOR® Code of Ethics. Learn more about how NAR membership can help you build professional networks, access educational and marketing resources, and participate in advocacy initiatives.

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