Mortgage Broker and Mortgage Banker

When you need a mortgage loan, you need to know the difference between a mortgage broker and a mortgage banker. As both yield the same outcome (a new home), people can confuse them. Yet understanding the ways they differ is helpful to the mortgage loan process.

Mortgage Brokers

A mortgage broker (either a firm or an individual) is an independent agent for both the mortgage loan borrower and the lender. A mortgage broker coordinates things for you and your lender, which can be one of the following: a credit union, bank, trust company, finance company, mortgage corporation or even an individual 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 investor. Which lender has the loan programs that fits your needs? A mortgage broker will help you find the best fit. Your broker will offer your mortgage loan application to a handful of lenders, and works with the lender of choice until the loan closes. The broker gets a commission from the borrower at closing.

Mortgage Bankers

The most important difference between a mortgage broker and a mortgage banker is that a mortgage banker is employed by a lending institution (a bank, credit union, or others) to process loans only from that institution. They may have the ability to offer loans to fit many different situations, but all the loans will be programs of the same lender.

Also called a "loan representative" or "account executive," a mortgage banker represents the borrower to the lender. From finding a loan to closing, a mortgage banker will help you through the process. Mortgage bankers will be compensated with a commission or salary for their work by their employers.