Know what to expect: Mortgage Brokers and Mortgage Bankers

When it's time to find a mortgage , you need to know the difference between a loan officer and a mortgage broker. As both produce the same result (a new home), it's common to confuse them. Yet it is beneficial to recognize the ways they differ so you have clear expectations of them as you enter 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 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 a private investor. You partner with a mortgage broker to look at your financial situation and find the lender who has the best loan for you. You give your loan application to your broker, who offers it to one or more 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 Mortgage Banker?

The biggest difference between a mortgage broker and a mortgage banker is that the latter works for a lending institution (a bank, credit union, or others) to process loans only from the products of that institution. There may be a wide range of loans types to choose from even though all are products of that specific lending institution.

Also called a "loan representative" or "account executive," a loan officer acts of behalf of the borrower to the lender. A loan officer can help the borrower through the selection, processing and loan closing. Lenders give their loan officers a salary or commission.

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