Know what to expect: Mortgage Brokers and Mortgage Bankers

Either a mortgage broker or a mortgage banker may work with you when you apply for a mortgage loan. Because both a mortgage broker and mortgage banker will help you buy your new home, it's understandable to confuse them. Yet it is useful to understand the ways they differ so you know what to expect from them as you enter your mortgage process.

What is a Mortgage Broker?

A mortgage broker is an individual or firm that is an independent agent for the mortgage loan applicant as well as the lender. A mortgage broker coordinates things between you and your lender, which can be one of the following: a bank, trust company, credit union, mortgage corporation, finance company or even an individual 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. A mortgage broker can analyze your numbers to determine which lender is the right fit for you. You give your loan application to your broker, who submits it to various lenders. Your mortgage broker then assists your work with the lender chosen until the closing of the loan. At closing, the broker's commission is given by the borrower.

About Loan Officers

The biggest difference between a mortgage broker and a mortgage banker is that the latter works on behalf of a lending institution (a bank, credit union, or others) to process loans only originated from the programs of that institution. While a mortgage banker may market quite a variety of loans, they will be programs from that lender alone.

A mortgage banker (also known as an "account executive" or "loan representative") acts on behalf of the borrower to the lending institution. The borrower is guided through the whole process, from selecting a loan to closing, by the mortgage banker. Mortgage bankers will be compensated with a commission or salary for their work by their employers.