Know the difference: Mortgage Brokers vs. Mortgage Bankers

When you need a mortgage , you may work with a loan officer or you may choose to work with a mortgage broker. Because a new home is the outcome of the work of both mortgage broker and mortgage banker, it's understandable to confuse the two job types. However, recognizing the ways they differ will be useful to the mortgage process.

What is a Mortgage Broker?

A mortgage broker (either a company or an individual) is an independent agent for the mortgage loan borrower as well as the lender. Your mortgage broker will stand as facilitator between you and the lending institution; which may be a credit union, bank, trust company, finance company, mortgage corporation or even a private investor. Which lender offers the loans that fits your financial situation? A mortgage broker will help you find the best one. Your broker will offer your loan application to one or more lenders, and works with the chosen lender until closing. At closing, the broker's commission comes from the borrower.

Mortgage Bankers

Loan officers are representatives of a particular lending institution (such as a bank) who process mortgages and other loan products originated by their place of employment alone. There may be an assortment of loans types to choose from, but all are products of that specific lender.

Your loan officer represents you to the bank or other lending institution. From choosing a loan product to closing, a mortgage banker can guide the borrower through the process. Either a salary or commission is given to mortgage brokers by their employers.