Mortgage Broker vs. Mortgage Banker

When it comes to applying for a mortgage , you may work with a loan officer or you may choose to work with a mortgage broker. Since a new home is the outcome of the work of both mortgage broker and mortgage banker, it's understandable to confuse the two. Yet recognizing how they are different will be valuable to your mortgage process.

Mortgage Brokers

A mortgage broker (either a firm or an individual) is an independent agent for both the mortgage loan borrower and the lender. A mortgage broker coordinates things between you and your lender, which can be one of the following: a credit union, bank, trust company, finance company, mortgage corporation 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 investor. You use a mortgage broker to review your financial circumstance and find the lender who has the best loan program for you. Your broker will present your loan application to several lenders, and works with the chosen lender until the loan closes. At closing, the broker's commission comes from the borrower.

What is a Loan Officer?

The most important difference between a mortgage broker and a loan officer is that a loan officer works for a lending institution (a bank, credit union, or others) to market and process loans solely from that institution. There can be a wide range of loans types to choose from, but all are programs of that specific lender.

Also called a "loan representative" or "account executive," a loan officer acts of behalf of the borrower to the lending institution. The borrower is walked through the entire process, from selecting a loan to closing, by the mortgage banker. Either a salary or commission is paid to loan officers by their employers.

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