Know the difference: Mortgage Brokers and Loan Officers

When you apply for a mortgage loan, you may work with a mortgage banker or you may choose to work with a mortgage broker. It's understandable to confuse the two job types as both will reap the same outcome: a new home. But for the application process, it will help if you understand how they are different.

What is a Mortgage Broker?

During the mortgage loan process, an individual or company 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 credit union, bank, trust company, finance company, mortgage corporation or even a private investor. You work with a mortgage broker to review your financial situation and lead you to the lender who has the right loan for you. You deliver your loan application to your broker, who presents it to one or more lenders. Your mortgage broker then helps you work with the lender chosen until closing. If the loan closes, the broker's commission is paid by the borrower.

What is a Loan Officer?

The biggest difference between a mortgage broker and a mortgage banker is that a loan officer is employed by a lending institution (a bank, credit union, or others) to market and process loans only originated from the programs of that institution. There can be a variety of loans types to choose from even though all are products of that particular lending institution.

A mortgage banker will represent you to the bank or other lending institution. A mortgage banker can guide you through the application, processing and closing of the loan. Lending institutions pay their loan officers a salary or commission.

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