Mortgage Broker and Mortgage Banker

When you need a mortgage loan, you may work with a mortgage banker or you may choose to work with a mortgage broker. Because both produce the same outcome (a new home), people sometimes confuse them. Yet knowing the differences between them will be beneficial to your mortgage process.

What is a Mortgage Broker?

During the mortgage loan process, an individual or firm who is an independent agent for the mortgage loan applicant as well as the lender is a mortgage broker. Your mortgage broker will stand as coordinator between you and the lending institution; which may be a bank, trust company, credit union, mortgage corporation, finance company or even a private investor. A mortgage broker can look at your finances to determine which lender is the best fit for your loan needs. You deliver your loan application to your broker, who presents it to several lenders. Your mortgage broker then guides your work with the lender of choice until the closing of the loan. The broker receives a commission from the borrower if the loan closes.

Loan Officers

The most important difference between a mortgage broker and a loan officer is that the latter is employed by a lending institution (a bank, credit union, or others) to process loans solely originated from that institution. They may be able to offer loans to fit a variety of situations, but all the loans are programs of the same lender.

Also known as a "loan representative" or "account executive," a loan officer represents the borrower to the lending institution. From finding a loan to closing, a mortgage banker will guide you through the process. Lenders compensate the loan officers with a salary or commission.