A loan originator is sometimes also called a mortgage loan originator, or mortgage originator although they all complete the same function regardless of the name. A loan originator is typically a company or individual that guides a potential borrower throughout the application process to closing. Loan originators typically work for mortgage brokers or direct mortgage lenders. They guide a borrower throughout the entire loan process from start to finish.
Mortgage loan originators help borrowers prepare their paperwork and guide them throughout the underwriting process. In addition to that, they make sure the borrower receives the right type of mortgage for their purposes.
The fee for mortgage loan originators is generally included within the mortgage closing costs. Borrowers pay these fees when closing the purchase of a home or residential property.
Since loan originators assist individuals throughout the mortgage process, they are part of the primary mortgage market.
They generally make a profit by charging fees throughout the process, and with the difference in interest rates, when they later sell the mortgage to the secondary mortgage market. These mortgages are generally bought by either Freddie Mac or Frannie Mae, government sponsored private companies. The secondary mortgage market generally pays a premium on consumer mortgages. These mortgages are later turned into mortgage-backed securities.
It is important to note, that similarly to realtors, many loan originators tend to work on a commission-only basis. That means that they do not have a safety net or base salary, and must facilitate mortgages to make a living.