Broker vs. Mortgage Banker- What’s the Difference?
August 27th, 2008Posted by Leann
Many Buyers do not understand the difference between a mortgage broker and a mortgage banker, and how it relates to their purchase. Just a quick overview…
A mortgage lender lends you your funds from a specific lending institution that they are associated with. Like Countrywide, Bank of America, or Wells Fargo, to name a few institutions. The funds come from that institution only. A mortgage broker acts as an intermediary who sources loans. This means that he/she can find a loan that fits your needs from one of many lending institutions. So, whereas the mortgage lender works specifically for the lender that he/she works for, the broker works as a conduit between the Buyer and the lender.
Both the broker and the banker will end up selling your loan on the secondary market, as there is a very small percentage of bankers who originate and keep their loans. Those lenders that do this are commonly referred to as “portfolio lenders”. The largest secondary market (or wholesale) institutions are Freddie Mac and Fannie Mae.
Service wise, there is and should be no difference between one or the other. As a Buyer, your primary concern should be the rates and terms offered and what loan makes the most sense for you. Pay attention to the fee structure that will be disclosed to you and if there are any underlying conditions for your approval that may affect your ability to close your transaction in a timely manner (and by your closing date of course!).
2 Comments Add your own
1. Rhonda Porter | August 27th, 2008 at 2:25 pm
There are also Correspondent Lenders which are kind of like a “Super Broker” or a blend between a bank and mortgage broker. Like mortgage brokers, Correspondent Lenders have the option of working with many various banks–the difference is that CL’s fund in their own credit lines and sell the loans AFTER closing. Correspondent lenders have more control of a transaction than a typical broker as they underwrite, make credit decisions and draw docs at their location instead of from where the loan is being brokered to. There’s not many correspondent lenders (as compared to brokers) around…the requirements are quite significant.
I always appreciate seeing posts that points out differences between the various types of lending institutions.
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