Know what to expect: Mortgage Brokers vs. Mortgage Bankers

When you work on your application for a mortgage loan, you need to know the difference between a mortgage broker and a mortgage banker. Since both yield the same outcome (a new home), people frequently confuse the two. However, it will be beneficial to understand the ways they differ so you have clear expectations of them as you enter the mortgage application process.

What is a Mortgage Broker?

During the mortgage loan process, an individual or group who is an independent agent for the mortgage loan borrower as well as the lender is a mortgage broker. Your mortgage broker will stand as coordinator between you and the lending institution; which can be a bank, trust company, credit union, mortgage corporation, finance company or even a private investor. Which lender has the mortgage loans that fits your financial situation? A mortgage broker will guide you to the best fit. You give your loan application to your broker, who submits it to various lenders. Your mortgage broker then assists your work with the lender chosen until the closing of the loan. The broker is given a commission from the borrower at closing.

Mortgage Bankers

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

A loan officer (also known as an "account executive" or "loan representative") acts on behalf of the borrower to the lending institution. From finding a loan product to closing, a loan officer can walk you through the process. Either a salary or commission is given to mortgage brokers by their employers.