Know the difference: Mortgage Brokers vs. Mortgage Bankers

Either a mortgage broker or a loan officer may work with you when you need a mortgage . Since both give the same outcome (a new home), it's common to confuse the two. However, it is important to recognize how they differ so you have clear expectations of them as you enter the mortgage application process.

Mortgage Brokers

A mortgage broker (either a firm or an individual) is an independent agent for the mortgage loan applicant as well as the lender. A mortgage broker coordinates things for you and your lender, which can be one of the following: a credit union, bank, trust company, finance company, mortgage corporation 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, private investor. Which lender offers the loan programs that fits your financial situation? A mortgage broker will lead you to the right one. Your broker will submit your loan application to one or more lenders, and works with the lender of choice until the loan closes. The broker is given a commission from the borrower when the loan closes.

Loan Officers

The most important difference between a mortgage broker and a mortgage banker is that the latter works on behalf of a lending institution (a bank, credit union, or others) to offer and process loans only from that institution. While a mortgage banker may offer quite a range of loans, they all are products with that one lender.

A mortgage banker (also called an "account executive" or "loan representative") acts on behalf of the borrower to the lender. A mortgage banker can guide you through the application, processing and loan closing. Loan officers are paid a commission or salary for their work by their employers.