Know the difference: Mortgage Brokers vs. Mortgage Bankers

When you apply for a mortgage , you may work with a loan officer or you may choose to work with a mortgage broker. Since a new home is the result of the work of both mortgage broker and loan officer, it's understandable to confuse them. Yet understanding how they are different will be helpful to your mortgage loan process.

What is a Mortgage Broker?

A mortgage broker (either a firm or an individual) is an independent agent for the mortgage loan borrower as well as the lender. A mortgage broker facilitates things between you and your lender, which can be one of the following: a credit union, bank, trust company, finance company, mortgage corporation or even an individual, private investor. Acting as a facilitator between you and your lender, your mortgage broker can match you with a bank, trust company, credit union, mortgage corporation, finance company 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 various lenders, and works with the lender of choice until the loan closes. At closing, the broker's commission comes from the borrower.

What is a Loan Officer?

Mortgage Bankers work for a particular lending institution (such as a bank) who promote and process mortgages and other loans originated by their company alone. They may be able to offer loans to fit a variety of situations, but all the loans are programs from the same lender.

Also called a "loan representative" or "account executive," a loan officer represents the borrower to the lending institution. The borrower is walked through the whole process, from loan selection to closing, by the mortgage banker. Lending institutions compensate the loan officers with a commission or salary.

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