Know the difference: Mortgage Brokers vs. Mortgage Bankers

Either a mortgage broker or a loan officer may help you when you apply for a mortgage . As both reap the same outcome (a new home), people can confuse the two. However, it will be helpful to know the difference between them so you know what to expect from them as you enter the mortgage application process.

Mortgage Brokers

A mortgage broker (either a company or an individual) is an independent agent for both the mortgage loan borrower and the lender. Your mortgage broker will stand as coordinator between you and the lending institution; which may be a bank, trust company, credit union, mortgage corporation, finance company or even an individual, private investor. Which lender offers the mortgage loans that fits your needs? A mortgage broker will help you find the right fit. You give your application to your broker, who offers it to various lenders. Your mortgage broker then assists your work with the lender chosen until closing. The borrower gives a commission to the broker when the loan closes.

About Loan Officers

The main difference between a mortgage broker and a mortgage banker is that the latter is employed by a lending institution (a bank, credit union, or others) to process loans only originated from the programs of that institution. They may be able to promote loans to fit a variety of situations, but all the loans will be programs from the same lender.

Also known as a "loan representative" or "account executive," a loan officer acts of behalf of the borrower to the lending institution. From selecting a loan program to closing, a loan officer can help you through the process. Either a salary or commission is paid to loan officers by their employers.