Know the difference: Mortgage Brokers vs. Mortgage Bankers

When you work on your application for a mortgage loan, you should know the difference between a loan officer and a mortgage broker. People usually confuse the two since both will give the same outcome: a new home. However, it will be helpful to recognize the difference between the two jobs so you know what to expect from them during the mortgage process.

What is a Mortgage Broker?

A mortgage broker (either a group or an individual) is an independent agent for the mortgage loan borrower as well as the lender. A mortgage broker coordinates things between 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 credit union, bank, trust company, finance company, mortgage corporation or even an individual, private investor. A mortgage broker will look at your financial situation to find out which lender is the right fit for your loan needs. You give your mortgage application to your broker, who presents it to several lenders. Your mortgage broker then guides your work with the lender of choice until closing. The borrower submits a commission to the broker upon closing.

What is a Loan Officer?

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 promote and process loans solely from that institution. While a loan officer may promote quite a variety of loans, they will be programs from that lender alone.

Also called a "loan representative" or "account executive," a mortgage banker acts of behalf of the borrower to the lender. The borrower is walked through the whole process, from loan selection to closing, by the mortgage banker. Loan officers are compensated with a commission or salary for their work by their employers.

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