Know the difference: Mortgage Brokers vs. Mortgage Bankers

Either a mortgage broker or a loan officer can assist you when you apply for a mortgage loan. Since both a mortgage broker and mortgage banker will help you fund a new home, people usually confuse them. But for your application process, it can benefit you if you recognize how they are different.

What is a Mortgage Broker?

A mortgage broker (either a firm or an individual) is an independent agent for both the mortgage loan applicant and 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 an individual, private investor. Acting as a facilitator between you and your lender, your mortgage broker can match you with a bank, trust company, credit union, mortgage corporation, finance company or even a private investor. A mortgage broker can look at your finances to find out which lender is the best fit for you. You give your loan application to your broker, who offers it to various lenders. Your mortgage broker then guides your work with the lender of choice until closing. The borrower submits a commission to the broker when the loan closes.

About Loan Officers

Loan officers are representatives of 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 be able to offer loans to fit many different situations, but all the loans will be products of the same lender.

Also known as a "loan representative" or "account executive," a mortgage banker acts of behalf of the borrower to the lender. From selecting a loan product to closing, a mortgage banker will guide a borrower through the process. Lending institutions compensate the loan officers with a commission or salary.