Know the difference: Mortgage Brokers and Mortgage Bankers

Either a mortgage broker or a loan officer can help you when it's time to get a mortgage loan. People often confuse the two because both will produce the same outcome: a new home. However, recognizing how they are different will be valuable to the mortgage process.

About Mortgage Brokers

A mortgage broker (either a group or an individual) is an independent agent for both the mortgage loan applicant 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 a private investor. You partner with a mortgage broker to look at your financial situation and find the lender who has the right loan for you. From application to closing, your mortgage broker works with you: submitting your application to a number of lenders, and coordinating the process with the lender through to the closing of your loan. The borrower submits a commission to the broker at closing.

What is a Mortgage Banker?

The main 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 market and process loans only from the programs of that institution. There may be a wide range of loans types to draw from even though all are products of that specific lender.

A mortgage banker (also known as an "account executive" or "loan representative") acts on behalf of the borrower to the lending institution. From finding a loan to closing, a mortgage banker can help the borrower through the process. Either a salary or commission is paid to loan officers by their employers.