Know the difference: Mortgage Brokers vs. Mortgage Bankers

When it comes to finding a mortgage loan, you should know the difference between a mortgage broker and a mortgage banker. Because both a mortgage broker and mortgage banker will help you purchase a new home, it's easy to confuse them. But for the application process, it will benefit you if you understand their differences.

What is a Mortgage Broker?

A mortgage broker is an individual or firm that serves as an independent agent for the mortgage loan applicant as well as the lender. 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 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 an individual, private investor. Which lender has the mortgage loans that fits your needs? A mortgage broker will guide you to the best one. You give your mortgage loan application to your broker, who offers it to various lenders. Your mortgage broker then helps you work with the lender of choice until closing. The borrower pays a commission to the broker at closing.

Loan Officers

Lending Institutions (banks, finance companies, and others) employ mortgage bankers to market, and process loans originated by that particular institution alone. There may be a wide range of loans types to choose from, but all are products of that particular lender.

A loan officer (also called an "account executive" or "loan representative") acts on behalf of the borrower to the lending institution. From finding a loan to closing, a loan officer will help a borrower through the process. Loan officers can be given a commission or salary for their work by their employers.