Mortgage Broker or Mortgage Banker - What's the difference?

Posted by Austin Shumaker on Mar 17, 2019 10:24:04 AM
Austin Shumaker
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The time has come: it's your time to have your piece of the pie of the American Dream. Time to find a lender. You've done your research, and you've come across two distinct terms: mortgage bankers and mortgage brokers. What is the difference between these two entities and which is right for you? How do they help you?

Mortgage Banker

A mortgage banker works inside a financial institution(bank). Bankers actually lend the institution's money.

Because they work for a financial institution, mortgage bankers have access to their institution's programs. In the event that their programs don't fit your needs, you'll have to shop around. This is where a mortgage broker comes in.

Mortgage Broker

A mortgage broker has no direct links to any one financial institution and can work with as many lenders as they see fit. As such, they are responsible for finding you the best loan that will work for you. Unlike mortgage bankers, brokers do not lend their own funds but are the middlemen between the bank and you.

Brokers represent you, the borrower, and are paid on commission or via flat fees that are a percentage of the value of the loan you take out. If you choose a mortgage broker, understand that you will have to start a relationship with them from scratch so there may be a little extra legwork so they can understand your needs.

Bottom line: whether you choose a mortgage banker or mortgage broker, be sure that you have options.

If you are currently in the market for a mortgage, we have a great resource with tips about what NOT TO DO, in order to make sure that you can have a smooth closing. 

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