Know the difference: Mortgage Brokers vs. Mortgage Bankers

When it's time to locate a mortgage loan, you may work with a mortgage banker or you may choose to work with a mortgage broker. Because a new home is the result of the work of both mortgage broker and mortgage banker, people sometimes confuse them. Yet understanding how they differ will be helpful to the mortgage loan process.

Mortgage Brokers

A mortgage broker is a person or firm that is an independent agent for the mortgage loan borrower as well as the lender. A mortgage broker facilitates 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, 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. Which lender has the loan programs that fits your financial situation? A mortgage broker will guide you to the best fit. From application to closing, your mortgage broker works with you: offering your loan application to several lenders, and walking you with the chosen lender through to the closing of the loan. The broker receives a commission from the borrower upon closing.

What is a Mortgage Banker?

The most important difference between a mortgage broker and a loan officer is that the latter works on behalf of a lending institution (a bank, credit union, or others) to offer and process loans solely from the programs of that institution. They may have the ability to market loans to fit a variety of situations, but all the loans will be programs of the same lender.

A loan officer represents you to the bank or other lending institution. From choosing a loan program to closing, a loan officer can walk a borrower through the process. Lenders pay their mortgage bankers a commission or salary.