Know what to expect: Mortgage Brokers vs. Loan Officers

When it's time to locate a mortgage loan, you should know the difference between a mortgage broker and a mortgage banker. Because both a mortgage broker and mortgage banker will help you buy your new home, people often confuse them. Yet knowing how they differ is important to the mortgage loan process.

What is a Mortgage Broker?

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 a private 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 investor. A mortgage broker can consider your finances to find out which lender is the best fit for you. You give your application to your broker, who offers it to a number of lenders. Your mortgage broker then guides your work with the lender of choice until the closing of the loan. The broker gets a commission from the borrower upon closing.

About Loan Officers

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

A loan officer (also known as an "account executive" or "loan representative") acts on behalf of the borrower to the lender. The mortgage banker will guide the borrower through the application, processing and loan closing. Loan officers can be compensated with a commission or salary for their work by their employers.

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