Know the difference: Mortgage Brokers vs. Mortgage Bankers

When you need a mortgage , you need to know the difference between a mortgage broker and a loan officer. People frequently confuse these as both will yield the same result: a new home. Yet it is useful to recognize the ways they differ so you know what to expect from them during the mortgage process.

Mortgage Brokers

A mortgage broker (either a company or an individual) is an independent agent for both the mortgage loan applicant and the lender. A mortgage broker facilitates things between 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 credit union, bank, trust company, finance company, mortgage corporation or even a private investor. You use a mortgage broker to consider your financial situation and find the lender who has the best loan program for you. You deliver your loan application to your broker, who offers it to a number of lenders. Your mortgage broker then guides your work with the lender chosen until the loan closes. Upon closing, 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 work with mortgages and other lending programs for their place of employment alone. They may have the ability to offer loans to fit many different situations, but all the loans will be products from the same lender.

Also known as a "loan representative" or "account executive," a mortgage banker acts of behalf of the borrower to the lender. A mortgage banker can guide the borrower through the selection, processing and closing of the loan. Lending institutions compensate the mortgage bankers with a salary or commission.

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