Know what to expect: Mortgage Brokers and Loan Officers

When you work on your application for a mortgage loan, you should know the difference between a loan officer and a mortgage broker. Because both a mortgage broker and mortgage banker will help you buy a new home, it's common to confuse them. But for your application process, it can benefit you if you understand how they differ.

Mortgage Brokers

A mortgage broker (either a group or an individual) is an independent agent for both the mortgage loan borrower and 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 a private investor. Acting as a facilitator between you and your lender, your mortgage broker can match you with a credit union, bank, trust company, finance company, mortgage corporation or even a private investor. You partner with a mortgage broker to examine your financial situation and lead you to the lender who has the right loan for you. Your broker will present your mortgage application to several lenders, and works with the lender of choice until the loan closes. The borrower pays a commission to the broker if the loan closes.

What is a Loan Officer?

The biggest difference between a mortgage broker and a loan officer is that the latter is employed by a lending institution (a bank, credit union, or others) to offer and process loans solely from the products 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 called a "loan representative" or "account executive," a loan officer acts of behalf of the borrower to the lending institution. A loan officer will help the borrower through the application, processing and loan closing. Either a salary or commission is paid to loan officers by their employers.

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