Know the difference: Mortgage Brokers vs. Mortgage Bankers

When you apply for a mortgage , you may work with a mortgage banker or you may choose to work with a mortgage broker. Since both a mortgage broker and mortgage banker will help you fund a new home, it's understandable to confuse them. But for your application process, it will benefit you if you know how they differ.

About Mortgage Brokers

A mortgage broker (either a firm or an individual) is an independent agent for the mortgage loan applicant as well as the lender. A mortgage broker facilitates things for 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, private investor. Acting as a facilitator between you and your lender, your mortgage broker can match you with a credit union, bank, trust company, finance company, mortgage corporation or even an individual, private investor. You work with a mortgage broker to examine your financial circumstance and find the lender who has the best loan for you. Your broker will present your loan application to a handful of lenders, and works with the lender of choice until closing. Upon closing, the broker's commission is paid by the borrower.

About Mortgage Bankers

The biggest difference between a mortgage broker and a mortgage banker is that the latter is employed by a lending institution (a bank, credit union, or others) to process loans only originated from the products of that institution. There can be an assortment of loans types to draw from even though all are programs of that particular lending institution.

Also known as a "loan representative" or "account executive," a loan officer represents the borrower to the lending institution. The borrower is helped through the whole process, from loan selection to closing, by the mortgage banker. Lenders pay their loan officers a commission or salary.