Who’s Who in Getting a Mortgage

To better understand how mortgages work, learn the players involved in securing a mortgage at every step.

Lender

The financial institution that will be loaning you the money for your home. They range from large multinational banks like Bank of America, HSBC, and Wells Fargo to small, boutique-style lenders and credit unions. Note that many lenders will sell your mortgage to another bank or mortgage servicer after you close (Learn more about what happens when your loan is sold in the When Your Loan Is Sold section).

Mortgage Broker

You can choose to work with a mortgage broker—someone who doesn’t necessarily work for a specific bank or lender. Most brokers work with several financial institutions, so they can compare and contrast different loan types, interest rates, and help you weigh the benefits and pitfalls of going with different lenders. Think of them as a lender matchmaker. A mortgage broker will ask you a few questions about your goals and your financial situation and will advise you on the lender, rate, terms, and points to get the best deal for your budget. They’ll also put together the necessary paperwork to process your loan and hand it off to the lender to get approved. A mortgage broker must be licensed in their state with the Nationwide Mortgage Licensing System & Registry (NMLS).

Pros: You get to choose from a group of different lenders to fit your needs (make sure your broker is giving you a variety of options and explaining the benefits and pitfalls of each).
Cons: You might have to pay them a fee as part of your closing costs. Be sure to ask if their fee goes to you or the bank.

Mortgage Loan Officer (Originator)

A loan originator or officer works for a specific lender. They will also consult with you about options for your loan, but only within the scope of what their bank offers. Once you decide on a loan, they’ll process it for you. You can choose to work with a mortgage broker first who will match you to a lender or go straight to a lender you’ve researched and found yourself. Once you’ve chosen a lender, you’ll deal exclusively with their loan officer.

Underwriter

Once your application is complete, your file goes to an underwriter. The underwriter verifies all your information and documents and makes sure you and—once you’ve found it—the property qualify for the loan. This includes verifying your employment, reviewing your credit history, reviewing the appraisal, and finding any errors or omissions in the closing documents. Ultimately, it’s the underwriter’s call on whether the loan will be approved. You don’t deal directly with the underwriter, so if they see any mistakes or red flags, they’ll go back to the loan officer to relay the information to you.

Automated Underwriting

Technology means that you more and more, buyers are choosing to forgo an underwriter altogether. Fannie Mae and Freddie Mac have developed two automated underwriting programs that use computers to accurately and objectively evaluate a candidate’s creditworthiness. Fannie Mae’s Desktop Underwriter (DU) and Freddie Mac’s Loan Prospector (LP) both assess a borrower’s credit risk and whether they meet their loan eligibility requirements. Automated underwriting can also be used for pre-approvals, but they’re usually done after you’ve solidified a purchase contract.