Should You Use a Mortgage Banker or a Mortgage Broker for Your Home Financing?

Estimated reading time: 2.5 minutes

Understanding the roles of mortgage bankers and mortgage brokers is key to navigating the home loan process. While both help borrowers secure financing, they operate in different ways, each offering unique advantages based on individual needs and preferences. Let’s explore these differences to guide you through home financing with confidence.

What is a Mortgage Banker?

A mortgage banker is an entity that may originate, fund, and occasionally service mortgage loans. A banker originates real estate loans and funds them using their own money. You can think of them as a one-stop mortgage shop, offering a variety of home loans such as conventional, jumbo, government, and even specialty programs.

Examples of Mortgage Banker’s Services

Working with a mortgage banker means you’re working directly with the lender who will finance your home. This can be a more streamlined option for borrowers who are looking for a faster and more straight forward lending process.

Loan Origination, Processing, and Underwriting

When a loan application is submitted, the banker’s processing and underwriting team accurately determines if the borrower meets the guidelines set by the institution or investor.

Loan Servicing

The lender may keep the loans they funded and service them, which includes collecting the borrower’s monthly payments, managing escrow, and providing letters to borrowers who have fully paid off their loans.

Selling Loans

After origination, mortgage bankers may sell the loan or its servicing rights on the secondary mortgage market. This frees up their funds to help more borrowers with home financing. As a borrower, the only change that occurs is the entity that offers them assistance and takes their payment. The selling of a loan doesn’t affect the terms of the loan.

What is a Mortgage Broker?

Mortgage brokers are independent licensed and regulated professionals. Their role is to provide advice and connect you with lenders. They do not process, underwrite, or fund the loans themselves.

Typically, brokers earn commissions from lenders, borrowers, or both. These fees may be added to your loan, which is why it’s important to understand its cost structure upfront.

What are the Differences Between a Banker and a Broker?

A mortgage banker has many Licensed Loan Originators that offer an elevated level of service and personal attention to each of their borrowers from application until after closing. The transaction can be completed quickly with an in-house originating, processing, and closing team.

Alternatively, those who work with a broker may have difficulty contacting people who are in processing or underwriting if they have questions about the loan process.

Why Should You Work with a Mortgage Banker?

When you work with a mortgage banker, you work with a Loan Originator who becomes your home financing advisor. Your banking origination team will help you navigate the process and offer expertise about the best loan options for you. For a mortgage banker who is always in your corner, contact us today!