Know the difference: Mortgage Brokers and Loan Officers

Either a mortgage broker or a mortgage banker can help you when it's time to apply for a mortgage . It's understandable to confuse the two job types since both will give the same outcome: a new home. However, recognizing the ways they differ is important to your mortgage process.

What is a Mortgage Broker?

During the mortgage loan process, an individual or company who is an independent agent for both mortgage loan applicant and lender is a mortgage broker. Your mortgage broker will stand as coordinator between you and the lending institution; which may be a credit union, bank, trust company, finance company, mortgage corporation or even an individual, private investor. Which lender offers the loans that is right for you? A mortgage broker will lead you to the best one. Your broker will present your mortgage application to one or more lenders, and works with the lender of choice until closing. At closing, the broker's commission comes from the borrower.

About Mortgage Bankers

The biggest difference between a mortgage broker and a loan officer is that the latter works for a lending institution (a bank, credit union, or others) to market and process loans solely originated from that institution. They may have the ability to offer loans to fit many different situations, but all the loans will be products of the same lender.

A loan officer (also called an "account executive" or "loan representative") acts on behalf of the borrower to the lending institution. A mortgage banker will guide the borrower through the application, processing and loan closing. Mortgage bankers are compensated with a commission or salary for their services by their employers.