Know what to expect: Mortgage Brokers and Mortgage Bankers

When you need a mortgage loan, you should know the difference between a mortgage broker and a mortgage banker. People usually confuse them since both will reap the same result: a new home. But for the application process, it can benefit you if you recognize how they are different.

Mortgage Brokers

During the mortgage loan process, an individual or firm 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 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 a private investor. A mortgage broker can look at your financial situation to determine which lender is the right fit for you. Your broker will present your mortgage loan application to a handful of lenders, and works with the lender of choice until the loan closes. The broker is given a commission from the borrower upon closing.

What is a Mortgage Banker?

Lending Institutions (banks, finance companies, and others) employ loan officers to offer, and process mortgage loans solely originated by that specific institution. They may be able to promote loans to fit a variety of situations, but all the loans are programs of the same lender.

Also called a "loan representative" or "account executive," a loan officer acts of behalf of the borrower to the lending institution. From finding a loan program to closing, a mortgage banker can help you through the process. Lending institutions pay their mortgage bankers a commission or salary.