Know the difference: Mortgage Brokers and Mortgage Bankers
When it comes to finding a mortgage loan, you need to know the difference between a mortgage broker and a loan officer. People often confuse these since both will produce the same result: a new home. But as you enter the application process, it will help if you know how they are different.
What is a Mortgage Broker?
A mortgage broker (either a group or an individual) is an independent agent for both the mortgage loan applicant and the lender. Your mortgage broker will stand as coordinator between you and the lending institution; which may be a bank, trust company, credit union, mortgage corporation, finance company or even an individual, private investor. A mortgage broker can review your finances to find out which lender is the best fit for your loan needs. Your broker will offer your mortgage application to a handful of lenders, and works with the lender of choice until the loan closes. When the loan closes, the broker's commission comes from the borrower.
Lending Institutions (banks, finance companies, and others) employ loan officers to promote, and process loans from that specific institution alone. Although a mortgage banker may offer quite a range of loans, they all are programs of that lender alone.
Also known as a "loan representative" or "account executive," a loan officer represents the borrower to the lending institution. The loan officer will walk the borrower through the selection, processing and loan closing. Lending institutions compensate their loan officers with a salary or commission.
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