Mortgage Broker vs. Traditional Bank

When you're looking to get a mortgage loan, you may work with a bank or you may choose to work with a mortgage broker.  People often confuse the two job types even though both will glean the same results: a new home. However, it is important to understand the difference between the two types of roles so you know what to expect from them during the mortgage application process.

A mortgage broker is an individual or firm that acts as an independent agent for both the borrower and the lender of a mortgage loan.

Mortgage brokers facilitate the transaction between you and the lending institution, which can be a bank, trust company, credit union, mortgage corporation, finance company or even an individual private investor.  A mortgage broker will analyze your financial situation to determine which lender is the best fit for your loan needs. He or she will submit your mortgage application to one or more lenders in order to sell it, and works with the chosen lender until the loan closes. He or she receives a commission from the lender or borrower if the loan closes.

With a Bank, on the other hand, you will work with loan officer employees who work to sell and process mortgages and other loans originated by their employer. They often have a variety of loans types to draw from, but all originate from that specific lender.  The Bank will represent you and will guide you through the selection, processing and closing of your mortgage loan.  Loan officer employees are usually paid a salary or combination of salary and commission for their services.