Know the difference: Mortgage Brokers vs. Mortgage Bankers

When it comes to locating a mortgage , you may work with a loan officer or you may choose to work with a mortgage broker. As both a mortgage broker and mortgage banker can help you fund a new home, it's easy to confuse them. However, recognizing how they are different is advantageous to the mortgage loan process.

What is a Mortgage Broker?

A mortgage broker is a person or company that is an independent agent for the mortgage loan borrower as well as the lender. A mortgage broker facilitates things for 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, 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, private investor. You use a mortgage broker to analyze your financial situation and lead you to the lender who has the best loan program for you. Your broker will present your loan application to one or more lenders, and works with the chosen lender until the loan closes. The borrower submits a commission to the broker upon closing.

Loan Officers

The biggest difference between a mortgage broker and a mortgage banker is that the latter works on behalf of a lending institution (a bank, credit union, or others) to process loans solely from that institution. While a loan officer may promote quite a range of loans, they all are programs with that one lender.

A loan officer (also called an "account executive" or "loan representative") acts on behalf of the borrower to the lender. The loan officer can guide the borrower through the application, processing and loan closing. Either a salary or commission is paid to mortgage brokers by their employers.