Mortgage lead generation is the collection of contact, personal and financial information about a person (lead) interested in a mortgage. These leads are then sold to mortgage lenders in an attempt to close a loan.

In short, a mortgage lead is a consumer that a lender will attempt to convert into a borrower.

Mortgage lead generators will often analyse the data collected in order to sell the information (leads) to a lender that best suits the needs of the borrower. This is not so much done in the interest of the potential borrower, but as a way of maintaining the lead quality. Better quality leads equals higher price per lead. Also, if a lead generator consistently supplies bad quality leads, he may be excluded from working with a particular lender.

Under normal circumstances the lead generator sell the lead to more than one lender, usually 4 or 5, with each lender submitting an offer to the interested borrower. The borrower will then pick the best offer.

Lead values vary widely, but they can range from $5 to as high as $15.

Usually you respond to some kind of an ad, in our case online, where you fill out a questionnaire. This questionnaire, along with your personal information, is sold off to lenders, that will later contact you and try to sell you on a loan.

The questions usually ask about your income, employment history, outstanding debt, credit history, home value and other information of value to the lender.

As lead is valuable because of the interest manifested in the product (in this case a mortgage) by a person. The more qualified the lead, the more valuable it is to the lender. Also, the more information a lead supplies the more valuable it is to the lender.

From your standpoint as a "lead", lead generation sites save time and money. Instead of searching around for the best deal, and having to supply your information and answering the same questions repeatedly, you supply the information once to the lead generator, and then wait for contact from the different borrowers.

With the onset of the internet, mortgage leads are not really generated by the lenders themselves. More often than not, an affiliate marketer will generate the leads through online marketing. Usually the affiliate marketer himself will know nothing about the mortgage business himself.

The internet marketer can generate these leads using PPC advertising, email marketing or niche sites, such as blogs.

Since lead generators are paid per lead, sometimes, and in an attempt to gain a higher number of leads, internet marketers will promise more than the actual lender can deliver.

If the subject of personal finance and loans interests you, I also recommend you read my hub on consolidating student federal loans.