Know what to expect: Mortgage Brokers vs. Mortgage Bankers

Either a mortgage broker or a loan officer can work with you when you need a mortgage loan. Because a new home is the result of the work of both mortgage broker and mortgage banker, people frequently confuse the two. Yet it is important to recognize how they differ so you know what to expect from them during your mortgage process.

About Mortgage Brokers

A mortgage broker (either a firm or an individual) is an independent agent for both the mortgage loan borrower and the lender. A mortgage broker facilitates 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 an individual investor. You use a mortgage broker to review your financial circumstance and find the lender who has the right mortgage loan for you. Your broker will present your loan application to one or more lenders, and works with the lender of choice until closing. At closing, the broker's commission is paid by the borrower.

What is a Mortgage Banker?

Loan officers represent a specific lending institution (such as a bank, credit union, etc.) who work with mortgages and other loan programs for their employer alone. There may be an assortment of loans types to draw from although all are products of that specific lender.

Also called a "loan representative" or "account executive," a loan officer acts of behalf of the borrower to the lender. The loan officer will walk you through the application, processing and closing of the loan. Loan officers may be given a commission or salary for their work by their employers.