Mortgage Broker or Mortgage Banker

When you need a mortgage loan, you may work with a loan officer or you may choose to work with a mortgage broker. Because a new home is the result of the work of both mortgage broker and loan officer, it's common to confuse them. However, it is beneficial to understand the difference between the two jobs so you know what to expect from them during your mortgage application process.

Mortgage Brokers

A mortgage broker (either a firm or an individual) is an independent agent for both the mortgage loan applicant and the lender. Your mortgage broker will stand as coordinator between you and the lending institution; which may be a bank, trust company, credit union, mortgage corporation, finance company or even an individual, private investor. You partner with a mortgage broker to consider your financial circumstance and find the lender who has the right loan program for you. From application to closing, your mortgage broker works with you: presenting your mortgage application to several lenders, and coordinating the process with the lender through to closing. At closing, the broker's commission is given by the borrower.

What is a Mortgage Banker?

The most important difference between a mortgage broker and a mortgage banker is that a loan officer works on behalf of a lending institution (a bank, credit union, or others) to process loans solely from the products of that institution. Although a loan officer may promote quite a range of loan programs, they will be products of that specific lender.

Also known as a "loan representative" or "account executive," a mortgage banker acts of behalf of the borrower to the lending institution. The borrower is helped through the whole process, from loan selection to closing, by the loan officer. Lenders give their loan officers a salary or commission.