Know the difference: Mortgage Brokers vs. Loan Officers

When it's time to locate a mortgage , you should know the difference between a mortgage broker and a mortgage banker. Since a new home is the result of the work of both mortgage broker and mortgage banker, it's common to confuse the two. Yet it will be important to know the difference between the two jobs so you have clear expectations of them during your mortgage process.

About Mortgage Brokers

A mortgage broker (either a company or an individual) is an independent agent for both the mortgage loan borrower and 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 a private 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 loan programs that is best for you? A mortgage broker will help you find the right fit. Your broker will present your loan application to various lenders, and works with the lender of choice until the loan closes. If the loan closes, the broker's commission comes from the borrower.

What is a Loan Officer?

The biggest difference between a mortgage broker and a loan officer is that a loan officer is employed by a lending institution (a bank, credit union, or others) to process loans solely originated from the products of that institution. There may be an assortment of loans types to draw from although 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 selecting a loan product to closing, a loan officer will walk the borrower through the process. Lending institutions compensate their loan officers with a commission or salary.