The mortgage company makes a mortgage loan and then sells it to a long-term investor. Once a loan is made it is sold for cash on the secondary market. The mortgage company will usually continue to service the loan, that means collect the monthly payment and handle matters such as insurance and property tax. Usually, mortgage companies are locally oriented, finding and making loans within 25 or 50 miles of their company.
A mortgage broker, on the other hand, specializes in bringing together borrowers and lenders, just as real estate brokers bring together buyers and sellers. The mortgage broker does not lend money and usually doesnít service the loan. The mortgage brokerís fee is expressed in points and is usually paid by the borrower. Mortgage brokers are locally oriented and usually are small firms of 1 to 10 persons.