Know what to expect: Mortgage Brokers vs. Mortgage Bankers

When you apply for a mortgage , you should know the difference between a mortgage broker and a mortgage banker. Since a new home is the outcome of the work of both mortgage broker and loan officer, people often confuse the two. But as you begin the application process, it will benefit you if you recognize how they differ.

What is a Mortgage Broker?

During the mortgage loan process, an individual or firm who is an independent agent for the mortgage loan borrower 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. Which lender has the mortgage loans that fits your needs? A mortgage broker will guide you to the right fit. Your broker will present your mortgage application to various lenders, and works with the chosen lender until closing. The broker gets a commission from the borrower at closing.

Loan Officers

Loan officers are representatives of a specific lending institution (such as a bank, credit union, etc.) who offer and process mortgages and other lending programs for their place of employment alone. They may have the ability to market loans to fit a variety of situations, but all the loans will be programs of the same lender.

Also known as a "loan representative" or "account executive," a loan officer represents the borrower to the lender. From choosing a loan to closing, a mortgage banker can walk a borrower through the process. Lenders compensate their mortgage bankers with a commission or salary.

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