Know what to expect: Mortgage Brokers and Loan Officers

When it comes to applying for a mortgage loan, you need to know the difference between a mortgage broker and a mortgage banker. Since both a mortgage broker and mortgage banker can help you buy your new home, people can confuse them. But as you begin the application process, it can help if you understand their differences.

What is a Mortgage Broker?

A mortgage broker is someone or firm that is an independent agent for the mortgage loan borrower as well as the lender. 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 a private investor. A mortgage broker can consider your numbers to determine which lender is the right fit for your loan needs. Your broker will present your mortgage loan application to a handful of lenders, and works with the chosen lender until closing. Upon closing, the broker's commission comes from the borrower.

Mortgage Bankers

The most important 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 promote and process loans solely originated from the programs of that institution. There may be a wide variety of loans types to choose from even though all are products of that specific lender.

A loan officer will represent you to the bank or other lending institution. The borrower is walked through the whole process, from loan selection to closing, by the mortgage banker. Loan officers are compensated with a commission or salary for their work by their employers.

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