Mortgage Broker vs. Mortgage Banker

When it comes to locating a mortgage loan, you may work with a mortgage banker or you may choose to work with a mortgage broker. People usually confuse these since both will reap the same result: a new home. However, it will be useful to know the ways they differ so you have clear expectations of them during the mortgage process.

Mortgage Brokers

During the mortgage loan process, an individual or company who is an independent agent for the mortgage loan borrower as well as the lender is a mortgage broker. A mortgage broker coordinates 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 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 a private investor. A mortgage broker will consider your finances to find out which lender is the right fit for you. From application to closing, your mortgage broker works with you: submitting your application to several lenders, and coordinating the process with the lender through to the closing of the loan. Upon closing, the broker's commission is paid by the borrower.

What is a Loan Officer?

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 originated from the programs of that institution. Although a mortgage banker may offer quite a range of loans, they will be programs of that lender alone.

Also called a "loan representative" or "account executive," a mortgage banker represents the borrower to the lending institution. From finding a loan product to closing, a mortgage banker can guide a borrower through the process. Either a salary or commission is paid to loan officers by their employers.