Know the difference: Mortgage Brokers vs. Mortgage Bankers

When you apply for a mortgage loan, you should know the difference between a mortgage broker and a loan officer. Because both a mortgage broker and mortgage banker will help you buy your new home, it's easy to confuse the two. Yet knowing how they differ is beneficial to your mortgage loan process.

About Mortgage Brokers

During the mortgage loan process, an individual or group who is an independent agent for both mortgage loan applicant and lender is a mortgage broker. Your mortgage broker will stand as coordinator between you and the lending institution; which can be a credit union, bank, trust company, finance company, mortgage corporation or even an individual, private investor. Which lender offers the loans that is best for you? A mortgage broker will help you find the right fit. From application to closing, your mortgage broker works with you: offering your mortgage application to a number of lenders, and walking you with the chosen lender through to closing. Upon closing, the broker's commission is given by the borrower.

What is a Loan Officer?

Loan officers are representatives of a particular lending institution (such as a bank) who promote and process mortgages and other loan programs from their company alone. They may have the ability to market loans to fit many different situations, but all the loans are programs of the same lender.

A mortgage banker (also known as an "account executive" or "loan representative") represents the borrower to the lending institution. From finding a loan to closing, a loan officer will guide you through the process. Mortgage bankers can be compensated with a commission or salary for their work by their employers.