A mortgage banker and a mortgage broker can both help you obtain a home loan. A mortgage banker works for a bank or similar lending institution which actually provides the money for the loan. A mortgage broker doesn’t represent one institution but works with many to shop for a loan for a specific individual. The banker is a direct lender. The broker is a middleman between you and the lender.
A mortgage banker is institutional…works in the loan department of a financial institution, a bank, savings and loan association or credit union. He works with loan applicants to complete the mortgage process. He advises borrowers of the various loan options within that institution.
A mortgage banker is paid by the institution, typically on a salary, although some institutions offer financial incentives or bonuses for performance. Their first responsibility is to the institution, to make sure loans are properly secured and the borrower is totally qualified and will make the loan payments. The banker can only make loans from their institution.
A mortgage broker represents the borrower and works with more than the lender. The responsibility is to get the borrower the best possible outcome, regardless of the institution. They are generally paid by commission based on the loan and the contracts their firm has with various wholesale lenders.
Here’s how professional organizations explain the differences. The National Association of Mortgage Brokers says a broker is “an independent real estate financing professional who specializes in the origination of mortgages.” A mortgage banker, according to the Mortgage Bankers Association, is “an individual, firm or corporation that originates, sells and or services loans secured by mortgages.”
A mortgage broker works with a borrower to determine needs and then shops among various lending institutions for the loan package that best fits the situation and borrower. A broker has no direct ties to any one institution and is free to work with a variety of lenders to compare loans for the benefit of their borrowers.