Know the difference: Mortgage Brokers vs. Mortgage Bankers

When you need a mortgage , you may work with a loan officer or you may choose to work with a mortgage broker. Because both give the same result (a new home), people can confuse the two job types. But as you begin the application process, it can benefit you if you recognize how they are different.

What is a Mortgage Broker?

During the mortgage loan process, an individual or firm who is an independent agent for the mortgage loan borrower as well as the lender is a mortgage broker. A mortgage broker facilitates things between you and your lender, which can be one of the following: a bank, trust company, credit union, mortgage corporation, finance company or even a private 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. Which lender has the mortgage loans that fits your needs? A mortgage broker will lead you to the right fit. Your broker will offer your loan application to a handful of lenders, and works with the lender of choice until closing. Upon closing, the broker's commission is given by the borrower.

Mortgage Bankers

The main difference between a mortgage broker and a mortgage banker is that the latter is employed by a lending institution (a bank, credit union, or others) to promote and process loans only originated from that institution. There can be a wide range of loans types to choose from although all are products of that specific lender.

A loan officer (also called an "account executive" or "loan representative") acts on behalf of the borrower to the lender. From selecting a loan program to closing, a loan officer will walk you through the process. Loan officers may be paid a commission or salary for their services by their employers.