Know what to expect: Mortgage Brokers vs. Loan Officers

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 both a mortgage broker and mortgage banker can help you purchase a new home, it's understandable to confuse them. But as you enter the application process, it can benefit you if you understand how they differ.

What is a Mortgage Broker?

A mortgage broker (either a group or an individual) is an independent agent for both the mortgage loan borrower and the lender. Your mortgage broker will stand as coordinator between you and the lending institution; which can be a credit union, bank, trust company, finance company, mortgage corporation or even a private investor. A mortgage broker can review your finances to determine which lender is the right fit for your loan needs. Your broker will offer your mortgage application to one or more lenders, and works with the lender of choice until closing. The broker is given a commission from the borrower at closing.

Loan Officers

The most important difference between a mortgage broker and a mortgage banker is that a mortgage banker is employed by a lending institution (a bank, credit union, or others) to offer and process loans solely originated from that institution. They may have the ability to offer loans to fit many different situations, but all the loans are products of the same lender.

Your loan officer represents you to the bank or other lending institution. The borrower is walked through the whole process, from choosing the loan to closing, by the loan officer. Either a salary or commission is given to loan officers by their employers.