Know the difference: Mortgage Brokers vs. Mortgage Bankers

When you work on your application for a mortgage , you should know the difference between a mortgage broker and a mortgage banker. As both a mortgage broker and lending officer will help you buy a new home, people often confuse the two. However, it is useful to know the ways they differ so you know what to expect from them as you enter the mortgage application process.

What is a Mortgage Broker?

A mortgage broker (either a group or an individual) is an independent agent for both the mortgage loan applicant and the lender. Your mortgage broker will stand as facilitator between you and the lending institution; which may be a credit union, bank, trust company, finance company, mortgage corporation or even an individual, private investor. You work with a mortgage broker to look at your financial circumstance and lead you to the lender who has the best loan for you. You deliver your application to your broker, who offers it to a number of lenders. Your mortgage broker then assists your work with the lender of choice until closing. The borrower pays a commission to the broker upon closing.

About Mortgage Bankers

Lending Institutions (banks, finance companies, and others) employ loan officers to offer, and process loans originated by that specific institution alone. While a mortgage banker may promote quite a range of loan programs, they all are products of that particular lender.

A loan officer (also called an "account executive" or "loan representative") represents the borrower to the lender. A mortgage banker can walk the borrower through the application, processing and closing of the loan. Lending institutions compensate their mortgage bankers with a salary or commission.

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