Mortgage Broker

What it is:

A mortgage broker is an agent who connects property buyers with mortgage lenders.

How it works/Example:

A mortgage broker acts as a professional intermediary on a property buyer's behalf. A mortgage broker collects the property buyers' personal and financial information and connects them with mortgage lenders with competitive rates and mortgage terms. If the mortgage lender approves the property buyer's application, the mortgage broker collects a commission determined by the lender.

Why it Matters:

The role of a mortgage broker is solely to bring property buyers together with mortgage lenders. The mortgage broker has no involvement in the actual lending. For this reason, it is important not to confuse mortgage brokers with mortgage bankers, which are individuals and institutions with the financial resources to fund mortgages.

Best execution refers to the imperative that a broker, market maker, or other agent acting on behalf of an investor is obligated to execute the investor's order in a way that is most advantageous to the investor rather than the agent.