A mortgage broker is a person who is employed by a brokerage, rather than a bank or other lending institution, and works with the mortgage borrower to initiate a loan with the lender. Such brokers have a major role in the home and business mortgage industry. According to wikipedia.org, mortgage brokerages are responsible for initiating over half of the residential mortgages in the United States.

Mortgage brokers provide advice and assistance in the process of finding the right lending institution and particular loan type. According to the Tennessee Association of Mortgage Brokers’ web site, borrowers who use a broker (rather than borrowing directly) are more thoroughly educated about the options available to them and are able to obtain a mortgage which is the most appropriate for them. MSN Money indicates that some brokers are capable of providing access to special loans which are not otherwise available to borrowers; this is partially because of the broker’s ability to qualify for wholesale rate mortgages.

The vast majority of states require mortgage brokers to be licensed, with a few states having recently imposed this requirement or planning to within the next year. However, wikipedia.org indicates that most of the states do not require (by law) a broker of this type to work in favor of the borrower’s best interest, a fact home buyers should be aware of. According to bankrate.com, the levels of experience and/or education required to become licensed as a mortgage broker varies significantly from one state to another; some require several years (generally two to five years of college and/or experience in this field of work), while brokers in other states only need to pass a test or do not have to meet any particular requirements. While licensing requirements are minimal in a number of states, it should be taken into consideration that many professions don’t require any sort of license.

Basically, a broker is someone who is knowledgeable about mortgages, charges fees in exchange for helping a borrower find and arrange the right mortgage, and may be able to help in efforts to obtain better rates. It is not essential to use a broker when applying for mortgages, but doing this can potentially save time and/or money. When deciding whether or not to you should use a broker, the best choice is partially dependent upon how much you know about mortgages and lending institutions.