Mortgage Broker vs. Mortgage Banker

Either a mortgage broker or a mortgage banker may work with you when you need a mortgage loan. Since a new home is the result of the work of both mortgage broker and mortgage banker, it's understandable to confuse the two. However, understanding how they are different will be important to your mortgage loan process.

What is a Mortgage Broker?

A mortgage broker is a person or firm that is an independent agent for both the mortgage loan applicant and the lender. Your mortgage broker will stand as facilitator between you and the lending institution; which can be a credit union, bank, trust company, finance company, mortgage corporation or even a private investor. A mortgage broker can examine your finances to find out which lender is the right fit for your loan needs. From application to closing, your mortgage broker facilitates your loan process: offering your loan application to a number of lenders, and coordinating the process with the lender through to the closing of the loan. The borrower submits a commission to the broker at closing.

What is a Loan Officer?

The main 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 market and process loans solely originated from the products of that institution. There can be a wide range of loans types to choose from even though all are products of that particular lender.

Your loan officer will represent you to the bank or other lending institution. A loan officer can guide you through the application, processing and closing of the loan. Either a salary or commission is given to loan officers by their employers.