Know what to expect: Mortgage Brokers vs. Mortgage Bankers

When it comes to applying for a mortgage loan, you may work with a loan officer or you may choose to work with a mortgage broker. Because both a mortgage broker and mortgage banker will help you buy your new home, people often confuse the two. Yet it is helpful to know the ways they differ so you have clear expectations of them during your mortgage application process.

About Mortgage Brokers

A mortgage broker is someone or company that is an independent agent for the mortgage loan applicant as well as the lender. A mortgage broker coordinates things between 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, 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 a private investor. You use a mortgage broker to review your financial situation and lead you to the lender who has the right mortgage loan for you. Your broker will submit your mortgage loan application to various lenders, and works with the chosen lender until the loan closes. The borrower submits a commission to the broker upon closing.

About Loan Officers

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 market and process loans only from the products of that institution. Although a loan officer may market quite a range of loans, they all are products from that lender alone.

Also known as a "loan representative" or "account executive," a mortgage banker acts of behalf of the borrower to the lending institution. From choosing a loan product to closing, a mortgage banker can guide you through the process. Lending institutions compensate the loan officers with a commission or salary.