What is a mortgage loan originator?

Learn how mortgage origination works

Mortgage loan originators are people licensed in a state to take mortgage applications. They can work as loan advisors for lenders such as Freedom Mortgage. Mortgage loan originators can also be mortgage brokers who work with several lenders to help you find the right loan.

Sometimes, mortgage lenders are also called mortgage originators. Let’s talk about what mortgage originators (the people) and mortgage lenders (the companies) can do for you.

About loan advisors and mortgage brokers

Mortgage loan originators are licensed professionals who help you choose and apply for a mortgage. These professionals can also be called loan originators or loan advisors. Loan originators frequently help you estimate how much home you can afford, too, by prequalifying you for a mortgage.

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

Whether they are employed by your mortgage lender or for a company that brokered your loan application, your loan originator will work with your lender during the review of your mortgage application (this is often called mortgage underwriting). If the lender approves your application, your loan advisor or mortgage broker might help you close on your loan, as well.

As discussed above, mortgage originators who work for a lender are often called loan advisors. Mortgage originators who work with multiple lenders under another entity on your behalf are frequently called mortgage brokers.

About mortgage lenders

Banks, credit unions, and non-bank lenders that fund your loan may also be referred to as mortgage originators, although "mortgage lender" is the better term. At Freedom Mortgage, we have loan advisors who are employees and 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 origination fee?

Mortgage origination fees can also be called "lender fees." These are fees a lender might charge to review and underwrite your mortgage application. The cost of these fees varies from lender to lender. Mortgage origination fees 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 these fees in cash at closing.

Mortgage brokers also typically charge fees or commissions for their work. Sometimes, you may pay these fees. Other times, the fee might be paid by the lender.

What’s the difference between mortgage lending and mortgage servicing?

Broadly speaking, mortgage lending covers the activities that loan advisors, mortgage brokers, and mortgage lenders engage in from the time of application until the loan closes. Mortgage servicing covers the activities that mortgage servicers engage in after the loan closes. Servicers collect your monthly payments, manage your escrow account, send you monthly statements, answer your questions, and provide customer service.

The company making the mortgage loan and servicing that loan is often the same. However, at times, they can be two different companies. This means you might get a mortgage from your bank but make your monthly payments to another company. This is a normal part of getting a mortgage, and your lender will make sure you understand how to pay your monthly mortgage bill.

At Freedom Mortgage, we typically service the loans we originate. This means if you get a loan with Freedom Mortgage, you will make your monthly payments to Freedom Mortgage.

Freedom Mortgage also acquires the rights to service portfolios of mortgages from other mortgage servicing companies. If your mortgage was recently acquired by Freedom Mortgage, you can learn more by visiting our Welcome page.

Why do mortgage lenders sell their mortgages?

Mortgage lenders often sell the mortgages they originate to make money to fund loans for new customers. The system of selling mortgages to buyers and investors helps ensure there is “liquidity” in the home loan market, which means lenders have enough money to give mortgages to every person who wants and qualifies for a mortgage loan.

The system of selling mortgages has benefits for homebuyers and homeowners, as well as mortgage lenders and investors. If your mortgage originator has the money to give you a loan, it may be because they sold another loan that they originated.

At Freedom Mortgage, we typically service the mortgages we originate. That’s because we are dedicated to making you a customer for life!

Last reviewed and updated July 2024 by Freedom Mortgage.