Understanding the distinction between a mortgage banker and a mortgage broker can be crucial for borrowers, as it can impact their experience, the efficiency of the process, and potentially the cost of the loan.
Mortgage bankers are professionals who specialize in underwriting, approving, and closing loans for borrowers. Once a loan is processed, they may sell it to retail banks, investment firms, or government-sponsored enterprises like Fannie Mae and Freddie Mac. Being more of a one-stop-shop for mortgages, they offer a variety of loan types including conventional, jumbo, FHA, VA, and USDA loans. Their sole focus on mortgage lending, as opposed to a broader range of banking services, allows them to concentrate exclusively on this aspect. Working with a mortgage banker means interacting with federally licensed professionals who are deeply committed to the mortgage industry. These licensed loan officers are knowledgeable about lending laws, lender guidelines, and are fully dedicated to advising clients, structuring their loans effectively, and ensuring a smooth closing process.
On the other hand, mortgage brokers are licensed entities or individuals who represent lenders in selling loan programs. They do not lend money themselves. Instead, brokers assist borrowers in obtaining loans through retail or mortgage banks, aiming to find the best rate and terms from their network of lenders. The actual decision to underwrite the loan and the specific terms offered come from the lender, not the broker. The primary benefit of using a broker is the variety of choices they offer, as they have access to a multitude of lenders. However, once a broker matches a borrower with a lender, they typically step back from the process, which might pose challenges for borrowers in maintaining direct contact with the lender who is underwriting and funding the loan.