From the borrower’s point of view, there’s not much difference between a mortgage broker and a mortgage banker – a lender is a lender. However, knowing the differences between mortgage bankers and brokers can save you frustration, time and in some cases, money.
Mortgage bankers underwrite, approve and close loans for borrowers. They may then sell the loan to retail banks, investment firms, or agencies such as Fannie Mae and Freddie Mac. Mortgage bankers are more of a one-stop mortgage shop. With access to multiple lenders, bankers are able to offer a variety of home loans, such as conventional, jumbo, FHA, VA and USDA. Unlike traditional banks, mortgage bankers focus solely on mortgage lending without the distraction of other lending products or personal finance services. When you conduct business with mortgage bankers you are working with federally licensed professionals. Licensed loan officers have chosen to sell mortgages as a career and are well-versed in lending laws, lender guidelines and are 100 percent vested in counseling you, structuring your loan and closing the deal.
Mortgage brokers are federally licensed firms or individuals who sell loan programs on behalf of lenders. A broker doesn’t lend any money. These companies’ help borrowers obtain loans through retail banks or mortgage banks and try to match you with the one who will give you the best rate and term. The lender then decides whether or not to underwrite the loan and at what terms, not the broker. The advantage of using a broker is choice because the broker will have lots of lenders to match you with. But once the match is made, the broker is usually out of the picture so you might have difficulty staying in contact with the person who is underwriting and funding your loan.