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Mortgage Broker

A mortgage broker connects the true lender of funds and the borrower. The broker’s own funds aren’t lent to the borrower but rather an institution such as a bank makes the disbursement. In exchange for their services, the broker receives some fee (usually origination points - a percentage of the total loan amount)

Many private money or hard money lenders are in actual fact acting as extended brokers. They solicit cash from private investors and use these funds to make mortgage loans to borrowers. In return, they receive compensation in the form of origination fees and/or a small portion of periodic interest payments. They may also act more as a direct conduit between private lender/investors and individual borrowers.