Mortgage Banker vs. Mortgage Broker


You’ve heard these terms before: mortgage banker, broker, mortgage broker, mortgage lender. But the truth is that a loan officer performs the very same or similar duties no matter what type of mortgage company he or she works for. There are differences, however, and each role has its own advantages. It’s up to you to determine what you want to be and whom you want to work for. And hey, you can always change your mind.

I started in the mortgage business as a mortgage broker. The company was me, the owner, and two loan processors. It was small. And that’s where I learned the business. Later on in my lending career I worked for a small mortgage banker. Still later, that company was bought by a regional bank. Still later, we were swallowed up again by a national bank.

So I’ve been on all sides of the origination business, from broker to banker to bank. I know firsthand the advantages and disadvantages of being a mortgage broker and a mortgage banker, and I will explain them here.

By definition, there is one distinct difference. A broker does not make mortgage loans. A broker does not have a vault full of money all lined up to issue home loans.

A banker on the other hand, does make mortgage loans. A banker does have a vault full of money (or perhaps more accurately, a credit line) all lined up to make home loans.

You can’t tell the difference among a loan officer, a banker, or a broker if you just watched them work, as they perform essentially the very same functions. But there are certainly differences—differences that you need to evaluate before you decide which path to take.

Being a broker has the benefits of:

• Shopping different lenders for the best rate

• Shopping different lenders for a qualifying loan program

• Getting underwriting opinions from different sources

• Moving your clients’ loans in times of dramatic rate moves Being a banker has the benefits of:

• Having more control over the lending process

• Having full access to government programs such as Federal Housing Administration (FHA) loans

• Negotiating underwriting guidelines

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This article was sent to us by: Dr. Melson at 05312010

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