What is the difference between a Mortgage Broker and a Mortgage Banker?

According to the National Association of Mortgage Brokers, a Mortgage broker is, “An independent real estate financing professional who specializes in the origination of residential and/or commercial mortgages.”

Mortgage brokers bring the buyer and lender together.  They do not lend their own funds. The lend money from other sources like pension funds, banks, savings and loan, insurance companies, etc.

Mortgage Brokers Have Access to:

·        Many different lenders

·        Lots of different mortgage programs

·        More flexibility because of the wide variety of lenders

·        Shop for the best rates and find competitive pricing

·        Mortgage brokers do not hold their own loan. They will sell them off to a third party servicer of the loan like, Ocwen, Nationstar, Citibank.

Mortgage Banker is different than a broker.  According to Mortgage Bankers Association of America, is “An individual, firm or corporation that originates, sells and/or services loans secured by mortgages on real property.”

A Mortgage Banker can lend their own money or can act like a mortgage broker and lend money from different sources.

Mortgage Bankers Have:

·        Have access to fewer lenders

·        There are not as many types of programs

·        They can have very competitive rates depending on the loan program

·        Sometimes it can be easier if you are using the same bank where your accounts are

·        Depending on the bank they could keep the loan and service it – no third party servicer

·        Direct access to the loan officer, if you have questions, because they are at the bank

Mortgage Broker vs Mortgage Banker, which one is best.  There is no right or wrong, it all depends on what your financial situation is.  If you have marginal credit or issues with credit, a mortgage broker would be beneficial, because they have the ability to find lenders that have more flexible guidelines.  If you have great credit and have a great banking relationship with a bank, you will be able to get great terms and rates.  The bank will reward you for loyalty.  Overall, it is good to talk to both and then decide on what fits you best.