Know what to expect: Mortgage Brokers vs. Mortgage Bankers

Either a mortgage broker or a loan officer can assist you when you work on your application for a mortgage loan. People often confuse them as both will yield the same outcome: a new home. However, it is valuable to understand how they differ so you have clear expectations of them as you enter your mortgage application process.

Mortgage Brokers

A mortgage broker (either a company or an individual) is an independent agent for both the mortgage loan applicant and the lender. A mortgage broker coordinates 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 bank, trust company, credit union, mortgage corporation, finance company or even an individual, private investor. A mortgage broker will analyze your numbers to determine which lender is the right fit for you. You give your mortgage application to your broker, who submits it to one or more lenders. Your mortgage broker then assists your work with the lender of choice until closing. At closing, the broker's commission is paid by the borrower.

What is a Loan Officer?

The most important 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. They may have the ability to market loans to fit many different situations, but all the loans are products of the same lender.

A loan officer represents you to the bank or other lending institution. The borrower is guided through the entire process, from loan selection to closing, by the mortgage banker. Mortgage bankers are paid a commission or salary for their services by their employers.