Mortgage Broker vs. Mortgage Banker

When you need a mortgage loan, you should know the difference between a mortgage broker and a loan officer. As a new home is the outcome of the work of both mortgage broker and mortgage banker, people can confuse the two job types. Yet recognizing how they are different will be valuable to your mortgage loan process.

Mortgage Brokers

A mortgage broker (either a group or an individual) is an independent agent for the mortgage loan applicant as well as the lender. Your mortgage broker will stand as coordinator between you and the lending institution; which can be a credit union, bank, trust company, finance company, mortgage corporation or even an individual, private investor. A mortgage broker will analyze 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 submits it to one or more lenders. Your mortgage broker then guides your work with the lender chosen until the loan closes. When the loan closes, the broker's commission is given by the borrower.

Loan Officers

The most important difference between a mortgage broker and a loan officer is that the latter is employed by a lending institution (a bank, credit union, or others) to process loans only from the products of that institution. They may be able to market loans to fit many different situations, but all the loans will be products of the same lender.

Also called a "loan representative" or "account executive," a mortgage banker acts of behalf of the borrower to the lender. From selecting a loan program to closing, a mortgage banker will walk a borrower through the process. Lending institutions pay their loan officers a salary or commission.

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