Mortgage Banker vs Broker
What are they?
A loan officer for a mortgage banker works directly for that mortgage bank or lending institution. They use the banks own money to fund the loan, and are considered a direct lender. A loan officer for a mortgage broker is essentially a “store front” for a host of mortgage lenders or banks. A mortgage broker can be described as a middleman. The loans originated by a mortgage broker are not funded with the broker’s own money.
What are the advantages of a mortgage banker?
A mortgage banker has full control of your loan throughout the process from sales, to processing, to underwriting all the way to closing and funding. This may allow for a better customer service experience. Most mortgage bankers also offer a full suite of mortgage products including alternative financing options and second mortgages.
What are the advantages of a mortgage broker?
Mortgage brokers are typically smaller allowing them to provide a more personalized customer experience. Relationships with multiple lenders may allow some brokers to offer a variety of products at very competitive rates and terms. Because of their size, many brokers can make a profit with smaller margins than mortgage banks, and in some cases, offer more competative rates by shopping lenders.
What are the disadvantages of a mortgage banker?
Large institutional mortgage bankers may not be able to offer you the hands-on, personal customer experience you may desire. Most loan officers at mortgage bankers are paid a salary and a commission. Depending on the banker or the management of that mortgage bank, you could end up just being a number and not having a loan officer that has enough incentive to treat you like their only customer.
What are the disadvantages of a mortgage broker?
A mortgage broker does not typically have direct access to underwriters or closers. When it comes time to get your loan approved and closed, this may cause delays. If your loan application will potentially have any complications, a mortgage broker may be limited in what they can do to get you approved.
What is an independent mortgage banker?
An independent mortgage banker (IMB) is best described as a mix between a broker and a large, institutional mortgage banker. IMBs are usually privately owned and have relationships with multiple, big bank investors. Alliance Home Loans is an Independent Mortgage Banker, which allows us to act like a broker by having multiple banking relationships while also still having full, delegated control of the entire loan process just like big, institutional mortgage banks. We pay our loan officers full commission creating an incentive in our sale’s staff to provide quality customer care. A company typically of medium size, IMBs can be a great fit to provide the nimble, personalized customer service at competitive rates and terms.
No matter which type of lender you choose, it is important to match your needs as a customer to the loan officer and company that they work for ensuring a great fit for the service, products and price you expect.
If you would like to learn more about available lenders in your area, visit our Find a Loan Officer page and select the state where you are located.