What Is a Mortgage Loan Originator?

Learn What Mortgage Originators Do for You

You’ll likely work with a handful of mortgage professionals throughout the homebuying process, including at least one mortgage loan originator (MLO). Mortgage loan originators can also be mortgage brokers who work with several lenders—that is, mortgage companies—to help you find the right loan.

Sometimes, mortgage lenders are also referred to as mortgage originators, but in most cases, mortgage originators are individuals, not institutions. Let’s walk through what mortgage originators (the people) and mortgage lenders (the companies) can do for you when you’re buying a home as well as the differences between originators, officers, and brokers.

What Does a Mortgage Loan Originator Do?

Mortgage loan originators are licensed professionals who take mortgage applications for home purchases or refinances. They help you choose and apply for a mortgage and are sometimes called “loan advisors,” “loan officers,” or simply “loan originators.” They can also help you estimate how much home you can afford by getting you prequalified for a mortgage.

Once you’ve selected a loan, the loan originator will guide you through the mortgage process. They’ll help you complete a loan application and submit required credit and financial documents as well as guide you through signing disclosures.

Whether they’re employed by your mortgage lender or a company that brokered your loan application, your loan originator will work with your lender during the review of your mortgage application (often called mortgage underwriting). If the lender approves your application, your loan advisor or mortgage broker may also assist you in closing on your loan.

Mortgage Loan Originator vs. Broker vs. Loan Officer

Mortgage loan originators can go by different titles. For example, when they work for a single lender, they’re often called loan officers. But when they work with several lenders on your behalf, they’re often called mortgage brokers. While it’s common to confuse these terms, here’s the role they play in helping you secure financing:

• Mortgage loan originator: This is the broadest term, and it refers to the individual or, less often, the institution that initiates a mortgage application and guides it through the process. Both loan officers and mortgage brokers are considered mortgage loan originators.
• Mortgage loan officer: A loan officer works directly for a bank, credit union, or mortgage company. They help borrowers apply for a loan, but the funding typically comes from their employer (the lender).
• Mortgage broker: A broker doesn’t lend money themselves. Instead, they act as a go-between, connecting borrowers with multiple lenders to find the best loan option for their situation.

Are Mortgage Lenders Loan Originators?

Banks, credit unions, and non-bank lenders that fund your loan may be referred to as mortgage originators, although “mortgage lender” is the more accurate term. At Freedom Mortgage, we have loan advisors, employees who can help you apply for a mortgage with us. We also work with mortgage brokers who might help you select us for your next mortgage.

What Is a Mortgage Loan Origination Fee?

Mortgage origination fees, sometimes referred to as “lender fees,” are fees a lender might charge to review and underwrite your mortgage application. These fees vary in amount from lender to lender and are typically part of your closing costs. You may be able to include the cost of these fees in your loan amount, or you may be required to pay them in cash at closing. 

Mortgage brokers also typically charge fees or commissions for their work. Sometimes, you may be required to pay these fees. Other times, the lender may cover the cost.

How to Select the Right Mortgage Loan Originator

Picking the right mortgage loan originator can make the homebuying process smoother and less stressful. Here are some tips designed to help you find a loan originator who’s trustworthy and knowledgeable:

• Review their experience: Make sure the originator is licensed in your state and registered with the Nationwide Multistate Licensing System (NMLS). Consider whether they specialize in specific loan products or have experience working with borrowers in situations similar to your own. You can also read reviews or ask for references.
• Compare rates and fees: Closing costs, fees, and interest rates can vary even among originators with the same lending company.
• Evaluate communication style: Choose someone who explains options clearly and answers questions promptly, since their job is to keep the process moving.

A good mortgage loan originator isn’t just there to submit your loan application. They’ll guide you through the process, answer your questions, and help you make informed decisions along the way.

Mortgage Loan Originator FAQs

Understanding what mortgage loan originators do during the mortgage application and underwriting process may bring up some questions. Here are some answers:

What’s the Difference Between Mortgage Lending and Mortgage Servicing?

Mortgage lending covers everything from the time you apply for a mortgage until your loan closes. Mortgage servicing, which the original lender may handle or pass along to a different mortgage company, begins after closing. It includes collecting payments, managing escrow accounts, and providing customer support. At Freedom Mortgage, we typically service the loans we originate. So, if you get a loan with us, you’ll also make your monthly payments to us.

Why Do Mortgage Lenders Sell Their Mortgages?

Lenders often sell the mortgages they originate to free up funds so they can continue making new loans. This system helps ensure there is “liquidity” in the home loan market, which means lenders have sufficient funds to finance mortgages for every person who wants and qualifies for a mortgage loan. It benefits both borrowers and lenders.

How Do Mortgage Loan Originators Get Paid? 

Mortgage loan originators typically receive compensation through a commission based on the size of the loan. Sometimes, the borrower pays this fee directly. Other times, the lender covers it. 

Final Thoughts: Mortgage Loan Originator

Getting a mortgage involves a lot of steps, and a mortgage loan originator can help you keep track of everything while providing you with some extra peace of mind on the road to homeownership. From explaining loan options to guiding you through closing day, mortgage loan originators can make you feel more confident throughout the homebuying journey.

Ready to get started? Begin your mortgage application with Freedom Mortgage today and let one of our loan advisors help you go from application to closing with ease.