Know the difference: Mortgage Brokers vs. Mortgage Bankers

Either a mortgage broker or a loan officer may work with you when you work on your application for a mortgage loan. As a new home is the outcome of the work of both mortgage broker and loan officer, it's easy to confuse them. Yet it will be helpful to understand how they differ so you know what to expect from them during your mortgage application process.

About Mortgage Brokers

A mortgage broker (either a company 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 bank, trust company, credit union, mortgage corporation, finance company 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. A mortgage broker will consider your numbers to determine which lender is the right fit for your loan needs. Your broker will submit your loan application to one or more lenders, and works with the chosen lender until the loan closes. When the loan closes, the broker's commission is given by the borrower.

Loan Officers

Lending Institutions (banks, finance companies, and others) employ mortgage bankers to promote, and process loans from that specific institution alone. They may have the ability to promote loans to fit a variety of situations, but all the loans are programs of the same lender.

A loan officer will represent you to the bank or other lending institution. The borrower is walked through the whole process, from loan selection to closing, by the mortgage banker. Either a salary or commission is given to mortgage brokers by their employers.