Know what to expect: Mortgage Brokers and Mortgage Bankers

Either a mortgage broker or a mortgage banker may help you when you work on your application for a mortgage . Because both reap the same outcome (a new home), it's easy to confuse them. But as you begin the application process, it will benefit you if you understand their differences.

Mortgage Brokers

During the mortgage loan process, an individual or firm who is an independent agent for both mortgage loan borrower and lender is a mortgage broker. Your mortgage broker will stand as facilitator between you and the lending institution; which may be a bank, trust company, credit union, mortgage corporation, finance company or even an individual investor. You work with a mortgage broker to look at your financial circumstance and find the lender who has the right loan program for you. You give your application to your broker, who presents it to various lenders. Your mortgage broker then helps you work with the lender chosen until closing. The borrower pays a commission to the broker when the loan closes.

What is a Mortgage Banker?

The main difference between a mortgage broker and a mortgage banker is that a loan officer works for a lending institution (a bank, credit union, or others) to promote and process loans only originated from the programs of that institution. They may be able to promote loans to fit a variety of situations, but all the loans are products of the same lender.

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

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