Know the difference: Mortgage Brokers and Mortgage Bankers

When you're looking to get a mortgage loan, you may work with a mortgage banker or you may choose to work with a mortgage broker. Since both give the same outcome (a new home), people usually confuse them. Yet understanding how they differ will be useful to your mortgage loan process.

What is a Mortgage Broker?

During the mortgage loan process, an individual or group who is an independent agent for both mortgage loan applicant and lender is a mortgage broker. 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, private investor. A mortgage broker will analyze your financial situation to determine which lender is the best fit for you. Your broker will offer your mortgage application to various lenders, and works with the chosen lender until the loan closes. If the loan closes, the broker's commission is given by the borrower.

Loan Officers

Loan officers represent a particular lending institution (such as a bank, credit union, etc.) who process mortgages and other loans from their employer alone. Although a loan officer may offer quite a range of loan programs, they will be programs with that lender alone.

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

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