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 both a mortgage broker and lending officer can help you fund your new home, people usually confuse the two. But for the application process, it can help if you know they ways they differ.

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. Your mortgage broker will stand as facilitator between you and the lending institution; which can be a bank, trust company, credit union, mortgage corporation, finance company or even an individual, private investor. A mortgage broker can examine your numbers to find out which lender is the right fit for your loan needs. You deliver your mortgage application to your broker, who offers it to one or more lenders. Your mortgage broker then assists your work with the lender chosen until closing. At closing, the broker's commission is given by the borrower.

Mortgage Bankers

The main difference between a mortgage broker and a mortgage banker is that a loan officer works for a lending institution (a bank, credit union, or others) to promote and process loans solely originated from the products of that institution. While a loan officer may promote quite a range of loan programs, they will be products with that one lender.

A loan officer (also known as an "account executive" or "loan representative") represents the borrower to the lender. The borrower is guided through the whole process, from finding the loan to closing, by the mortgage banker. Mortgage bankers are compensated with a commission or salary for their services by their employers.

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