Know the difference: Mortgage Brokers vs. Mortgage Bankers

Either a mortgage broker or a loan officer may assist you when you apply for a mortgage loan. As a new home is the result of the work of both mortgage broker and mortgage banker, people can confuse them. Yet knowing the ways they differ is valuable to the mortgage process.

About Mortgage Brokers

A mortgage broker (either a company or an individual) is an independent agent for both the mortgage loan applicant and the lender. Your mortgage broker will stand as coordinator between you and the lending institution; which can be a credit union, bank, trust company, finance company, mortgage corporation or even an individual investor. You use a mortgage broker to look at your financial circumstance and lead you to the lender who has the right loan program for you. Your broker will offer your mortgage loan application to various lenders, and works with the chosen lender until the loan closes. If the loan closes, the broker's commission is given by the borrower.

What is a Mortgage Banker?

Loan officers represent a specific lending institution (such as a bank, credit union, etc.) who promote and process mortgages and other loan programs originated by their place of employment alone. They may have the ability to offer loans to fit many different situations, but all the loans will be programs of the same lender.

Also known as a "loan representative" or "account executive," a loan officer represents the borrower to the lending institution. The loan officer will help you through the application, processing and loan closing. Lenders compensate their loan officers with a salary or commission.