Know the difference: Mortgage Brokers vs. Mortgage Bankers

When you work on your application for a mortgage loan, you may work with a loan officer or you may choose to work with a mortgage broker. It's easy to confuse the two since both will reap the same outcome: a new home. However, understanding the ways they differ will be helpful to the mortgage process.

What is a Mortgage Broker?

A mortgage broker (either a firm or an individual) is an independent agent for both the mortgage loan applicant and the lender. A mortgage broker coordinates things between you and your lender, which can be one of the following: a bank, trust company, credit union, mortgage corporation, finance company or even an individual investor. Acting as a facilitator between you and your lender, your mortgage broker can match you with a bank, trust company, credit union, mortgage corporation, finance company or even an individual investor. Which lender offers the loan programs that fits your financial situation? A mortgage broker will guide you to the best fit. You give your mortgage loan application to your broker, who offers it to a number of lenders. Your mortgage broker then helps you work with the lender of choice until the closing of the loan. At closing, the broker's commission comes from the borrower.

Loan Officers

The main difference between a mortgage broker and a mortgage banker is that a loan officer works on behalf of a lending institution (a bank, credit union, or others) to process loans solely originated from that institution. There can be a wide range of loans types to choose from although all are programs of that particular lending institution.

A mortgage banker represents you to the bank or other lending institution. A loan officer will walk the borrower through the selection, processing and closing of the loan. Loan officers will be given a commission or salary for their work by their employers.

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