If you are looking for a home loan or refinancing your existing home loan, you are likely to come across people or businesses that fall under two distinctive categories:
- Mortgage banker
- Mortgage broker
Understanding the key differences between the two can help you figure out which is best suited for your needs. Our team at First County Bank has compiled a guide with the key differences between mortgage bankers and mortgage brokers. Indeed, not all lenders are the same, so depending on who you choose to go with, you will have access to unique features and options.
Both a banker and a broker can help you get a home loan. They are also both listed by the federal U.S. Bureau of Labor Statistics as “loan officers” who fulfill similar functions. Yet, a mortgage banker is an institutional lender, while a mortgage broker is a middleman between the person seeking a loan and the lender. Below, we dive deeper into the differences and similarities between the two loan officers.
What Is a Mortgage Banker?
A mortgage banker is, or works for, an institution that funds, underwrites, approves, and closes mortgages. Once the mortgage is originated, the mortgage banker can choose to sell the loan to investment firms, specialist agencies, or even retail banks.
A mortgage banker will earn fees through the underwriting, approval, and closure process related to the mortgage. Typically, they work in the loan department of a bank or any other financial institution, where they are in charge of advising borrowers and approving or rejecting mortgage loan applications.
What Is a Mortgage Broker?
A mortgage broker does not fund mortgages, but is a federally licensed agency or individual who is authorized to sell loans on behalf of a lender. Unlike a mortgage banker, the broker doesn’t underwrite or approve the loan, as these steps are still done by the lender.
The mortgage broker is tasked with getting the borrower the best possible deal for their needs and situation. Brokers earn a commission, which is paid by the loan, aka the difference between the rate they provide to the borrower and the one they receive from the lender. Alternatively, some brokers prefer a percentage of the loan value instead.
Why You Should Work With a Mortgage Banker
A mortgage banker closes the deal in the name of the lending institution and uses the institution’s funds to finance it. Here are some benefits to working with mortgage bankers, such as First County Bank.
They Provide Loans for One Specific Financing Institution
As mortgage bankers work for a specific institution, they can only assist borrowers with the loans from their institution. Though they are knowledgeable about the different loan options provided by their institution, they may not advise on any other mortgage options, and the approval process ensures the borrower meets the specific eligibility criteria.
If you have a complex financial situation, you may want to improve it before applying for a bank loan.
They Decide Whether an Application Is Approved or Rejected
While approval criteria can be strict, there can still be some room for a subjective decision depending on the circumstances. As the mortgage banker is the individual in charge of your application, a borrower can use their appointment with a banker to clarify their financial situation or explain irregularities that might play in their disfavor.
Mortgage bankers act as advisors, so in exceptional situations, they can make the difference between being approved or being rejected after meeting with the borrower.
You Can Save Time and Money With a Mortgage Banker
By working directly with the loan officer at the bank, you can rapidly find out whether your loan is approved or not. The transaction can be completed quickly for borrowers who meet the eligibility criteria, saving you time and money.
Get Your Mortgage With First County Bank
Are you still unsure where to turn and get a mortgage? At First County Bank, we understand it can be stressful for home buyers to find the right mortgage options for their needs. That’s why we offer an extensive choice of mortgage tools and calculators to help you unlock your full financial potential.
We know that navigating property purchases can be difficult, but our dedicated team of mortgage experts are available to help you understand how much you can afford to borrow and prepare you for your next adventure as a homeowner. Get in touch today to make your dream home a reality!
