Know the difference: Mortgage Brokers and Loan Officers

When you work on your application for a mortgage loan, you need to know the difference between a mortgage broker and a loan officer. People can confuse them because both will yield the same outcome: a new home. However, recognizing how they are different will be useful to the mortgage process.

Mortgage Brokers

A mortgage broker is an individual or company that acts as an independent agent for both the mortgage loan borrower and the lender. A mortgage broker facilitates 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. You use a mortgage broker to look at your financial situation and lead you to the lender who has the best loan program for you. You give your mortgage 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. Upon closing, the broker's commission is given by the borrower.

About Loan Officers

Lending Institutions (banks, finance companies, and others) employ loan officers to promote, and process mortgage loans solely on behalf of that specific institution. While a loan officer may promote quite a range of loans, they all are programs with that particular lender.

Also known as a "loan representative" or "account executive," a mortgage banker acts of behalf of the borrower to the lending institution. From selecting a loan program to closing, a mortgage banker will guide you through the process. Lenders compensate their loan officers with a commission or salary.