Know the difference: 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. People sometimes confuse these as both will yield the same outcome: a new home. However, understanding how they are different is advantageous to the mortgage loan process.

About 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 between you and your lender, which can be one of the following: a credit union, bank, trust company, finance company, mortgage corporation or even a private 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. A mortgage broker will consider your finances to find out which lender is the best fit for your loan needs. Your broker will present your loan application to a handful of lenders, and works with the chosen lender until closing. The broker receives a commission from the borrower if the loan closes.

About Loan Officers

The most important difference between a mortgage broker and a loan officer is that the latter is employed by a lending institution (a bank, credit union, or others) to process loans solely originated from that institution. There may be a variety of loans types to choose from, but all are products of that specific lending institution.

A loan officer represents you to the bank or other lending institution. The borrower is guided through the entire process, from loan selection to closing, by the mortgage banker. Either a salary or commission is given to loan officers by their employers.