Mortgage Broker vs. Mortgage Banker

When you apply for a mortgage , you may work with a mortgage banker or you may choose to work with a mortgage broker. People sometimes confuse the two job types because both will yield the same outcome: a new home. But as you begin your application process, it will benefit you if you understand their differences.

What is a Mortgage Broker?

A mortgage broker is a person or firm that is an independent agent for the mortgage loan borrower as well as the lender. Your mortgage broker will stand as coordinator between you and the lending institution; which can be a credit union, bank, trust company, finance company, mortgage corporation or even a private investor. Which lender offers the loan programs that fits your needs? A mortgage broker will guide you to the best fit. You deliver your mortgage application to your broker, who submits it to a number of lenders. Your mortgage broker then assists your work with the lender chosen until the closing of the loan. The broker gets a commission from the borrower upon closing.

About Mortgage Bankers

Loan officers are representatives of a particular lending institution (such as a bank, credit union, etc.) who market and process mortgages and other lending programs from their employer alone. They may have the ability to market loans to fit a variety of situations, but all the loans are products of the same lender.

Also called a "loan representative" or "account executive," a loan officer acts of behalf of the borrower to the lender. The borrower is walked through the whole process, from selecting a loan to closing, by the loan officer. Lending institutions pay their mortgage bankers a commission or salary.