Know the difference: Mortgage Brokers and Loan Officers

When it's time to locate 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 the two job types. But as you enter your application process, it will help if you recognize their differences.

About Mortgage Brokers

A mortgage broker is someone or firm that is an independent agent for the mortgage loan borrower as well as the lender. Your mortgage broker will stand as facilitator between you and the lending institution; which may be a credit union, bank, trust company, finance company, mortgage corporation or even a private investor. You work with a mortgage broker to look at your financial situation and find the lender who has the right loan for you. From application to closing, your mortgage broker works with you: presenting your mortgage application to several lenders, and walking you with the chosen lender through to closing. If the loan closes, the broker's commission is paid by the borrower.

What is a Loan Officer?

Lending Institutions (banks, finance companies, and others) employ mortgage bankers to promote, and process mortgage loans from that particular institution alone. There can be a wide variety of loans types to choose from although all are products of that specific lender.

A mortgage banker (also called an "account executive" or "loan representative") represents the borrower to the lending institution. The borrower is guided through the whole process, from selecting the loan to closing, by the loan officer. Loan officers are compensated with a commission or salary for their services by their employers.

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