Mortgage Broker vs. Mortgage Banker

When you need a mortgage , you need to know the difference between a mortgage banker and a mortgage broker. As both a mortgage broker and mortgage banker will help you buy your new home, people frequently confuse the two. However, knowing how they differ will be important to your mortgage loan process.

What is a Mortgage Broker?

A mortgage broker (either a company or an individual) is an independent agent for the mortgage loan applicant as well as the lender. Your mortgage broker will stand as facilitator between you and the lending institution; which may be a credit union, bank, trust company, finance company, mortgage corporation or even a private investor. A mortgage broker can look at your finances to determine which lender is the best fit for you. From application to closing, your mortgage broker works with you: presenting your loan application to a number of lenders, and walking you with the chosen lender through to the closing of the loan. The broker is given a commission from the borrower at closing.

What is a Loan Officer?

The most important difference between a mortgage broker and a mortgage banker is that a mortgage banker works for a lending institution (a bank, credit union, or others) to promote and process loans solely originated from that institution. There can be a wide range of loans types to choose from although all are programs of that particular lender.

Also called a "loan representative" or "account executive," a loan officer acts of behalf of the borrower to the lender. A mortgage banker can guide you through the application, processing and closing of the loan. Mortgage bankers are compensated with a commission or salary for their services by their employers.

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