Know what to expect: Mortgage Brokers vs. Mortgage Bankers

Either a mortgage broker or a loan officer may work with you when it comes to applying for a mortgage . As a new home is the outcome of the work of both mortgage broker and loan officer, it's understandable to confuse the two. Yet knowing how they differ will be useful to your mortgage process.

Mortgage Brokers

During the mortgage loan process, an individual or group who is an independent agent for both mortgage loan applicant and lender is a mortgage broker. A mortgage broker coordinates things between you and your lender, which can be one of the following: a bank, trust company, credit union, mortgage corporation, finance company or even an individual, 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. A mortgage broker can look at your finances to find out which lender is the best fit for you. From application to closing, your mortgage broker facilitates your loan process: presenting your loan application to a number of lenders, and coordinating the process with the lender through to the closing of the loan. The borrower submits a commission to the broker when the loan closes.

Mortgage Bankers

The biggest difference between a mortgage broker and a mortgage banker is that the latter is employed by a lending institution (a bank, credit union, or others) to offer and process loans only originated from the programs of that institution. There may be a wide range of loans types to choose from, but all are products of that particular lending institution.

Also known as a "loan representative" or "account executive," a mortgage banker represents the borrower to the lending institution. The borrower is walked through the whole process, from loan selection to closing, by the mortgage banker. Lenders give their mortgage bankers a salary or commission.