Know the difference: Mortgage Brokers and Mortgage Bankers

When you're looking to get a mortgage , you may work with a loan officer or you may choose to work with a mortgage broker. As both produce the same outcome (a new home), it's easy to confuse them. But as you enter your application process, it can benefit you if you recognize how they are different.

Mortgage Brokers

A mortgage broker is a person or company that serves as an independent agent for both the mortgage loan borrower and the lender. Your mortgage broker will stand as facilitator between you and the lending institution; which can be a credit union, bank, trust company, finance company, mortgage corporation or even an individual investor. You work with a mortgage broker to consider your financial situation and find the lender who has the best loan program for you. You give your mortgage application to your broker, who submits it to various lenders. Your mortgage broker then guides your work with the lender chosen until closing. The borrower pays a commission to the broker when the loan closes.

About Loan Officers

The biggest 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 process loans only from that institution. There can be a wide variety of loans types to draw from even though all are products of that particular lending institution.

A loan officer (also called an "account executive" or "loan representative") represents the borrower to the lender. The mortgage banker can help you through the application, processing and closing of the loan. Either a salary or commission is given to mortgage brokers by their employers.