Know the difference: Mortgage Brokers vs. Mortgage Bankers

When it comes to applying for a mortgage , you may work with a loan officer or you may choose to work with a mortgage broker. Because both reap the same result (a new home), people can confuse the two. But for the application process, it will help if you know how they are different.

Mortgage Brokers

A mortgage broker is an individual or company that works as 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 credit union, bank, trust company, finance company, mortgage corporation 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 a private investor. Which lender offers the mortgage loans that fits your financial situation? A mortgage broker will help you find the right fit. You deliver your loan application to your broker, who presents it to one or more lenders. Your mortgage broker then guides your work with the lender of choice until the closing of the loan. The broker gets a commission from the borrower upon closing.

Mortgage Bankers

The biggest difference between a mortgage broker and a mortgage banker is that the latter works for a lending institution (a bank, credit union, or others) to process loans only from the products of that institution. They may have the ability to offer loans to fit a variety of situations, but all the loans will be programs of the same lender.

Your loan officer represents you to the bank or other lending institution. From selecting a loan program to closing, a loan officer can help the borrower through the process. Loan officers are compensated with a commission or salary for their services by their employers.