Mortgage Broker, Mortgage Banker, or Loan Officer? What's the Right Call?

The differences can be subtle but crucial. Here’s what you need to know.

Mortgage Broker, Mortgage Banker, or Loan Officer? What's the Right Call?

Purchasing a property can involve a complex process, and obtaining it through a home loan is a significant choice regarding your finances. And in the loan line of business, various specialists and institutions assist in handling and working on the mortgages, such as mortgage brokers, mortgage bankers, or loan officers.

Even though homebuyers tend to confuse the three, all perform a distinct part in home financing. That is why homeowners must know and recognize their differences to come up with an intelligent choice in getting a loan. The homeowner needs to understand the role of each one and when is the perfect time to engage them.

From this perspective, let us figure out the differences between all three, so you can understand their roles when it comes to purchasing your dream home!

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Differences Among the Mortgage Broker, Mortgage Banker, and Loan officer

So you are looking for a mortgage but are not 100% sure where to turn. Don’t sweat it! Rate Simple has you covered! As Forbes recently reported, learning the ins and outs of mortgage brokers, mortgage bankers, and loan officers can result in the homeowners' serious savings of both their money and time.

The Mortgage Broker

Let’s begin with the home loan shopper of the mortgage world. Asking for the mortgage broker's advice can give the homeowner a deeper understanding of the various types of home loans in the market.

Hiring a mortgage broker is like hiring a personal loan shopper. They act as an intercessor, helping the homebuyer look for the best creditor. They can probe queries regarding the homeowner's financial status, like the credit history or credit standing, and can assist in completing the home loan request form. With all the details the homeowners’ have given, they will provide an endorsement for a mortgage officer or creditors who would offer to the home buyer with consideration of the financial status. They will hunt for the best rates and terms and customized options to your financial situation and needs.

A mortgage broker will have relationships with multiple lenders, but they are not the specific entity loaning you the money for your mortgage, be it home refinance or home purchase. They are also not going to approve your mortgage application personally. They will organize your financial details and credentials, including income, credit score, debt-to-income ratio (DTI), and more. From there, they will help identify precisely what mortgages you qualify for and help you pick the right home loan.

When Is the Right Call for the Mortgage Broker?

Engaging the services of a mortgage broker would be less time-consuming for the homeowner. Many mortgage brokers rely on commission rates according to the mortgage amount, which means that the expenses might be worth it for homebuyers who are financially challenged or with a history of debt and might not quickly be eligible for a mortgage at their preferred sales cost.

Enter the Mortgage Banker

The mortgage banker is a financial entity, such as credit unions or banks, which are in charge of loaning cash to assist the client's financial needs, either for business or housing, with the anticipation that the loan will be paid off.

Mortgage banker differs from mortgage broker in several significant ways. First, the former will intake your application, underwrite it, and approve it all by themselves. They will even walk you through closing, either lending you the money directly or acting as an intermediary as they get your loan money from the bank.

A mortgage banker will shop for the best rates and terms on your behalf when working with banks. They can originate a wide variety of mortgage loans, giving you a myriad of choices in loan products. They also can work with applicants of all kinds, including buyers seeking FHA loans and military personnel looking for VA loans.

Most of them have been in the industry for quite some time, with 10 years of experience at the minimum being the norm. That breadth of knowledge is excellent for would-be borrowers with complicated financial situations, especially if you still need to meet Fannie Mae or Freddie Mac's traditional lending criteria.

When Is the Right Call for the Mortgage Banker?

Mortgage bankers have various loans to present to the homebuyer and can provide specific kinds of mortgages with exceptional funding opportunities. They can also assist you with your mortgage regarding working with the settlement should you need one. Likewise, they can trade your loan or the privileges to facilitate it in an after-sale service. The great thing about this service is that mortgage bankers will not charge you to provide additional funds on your mortgage.

However, if you need to work on your financial profile a bit or don't quite meet the requirements to borrow the amount you need for your mortgage, you may want first to try to pay down some debt (think credit cards) to help improve your debt-to-income ratio (DTI). At the end of the day, it's all about increasing your credit score to make you more attractive to mortgage lenders.

Enter the Loan Officer

The loan officer option works for many. The initial phase is frequently speaking with a loan officer, the mortgage banker's sales representative. They are the financial institution’s employees or work directly for companies like credit unions, banks, or online direct lenders. They assist the buyers in applying for a loan in purchasing or refinancing their properties. They provide the potential property buyer options concerning the available home loan products, programs, and interest rates, but they offer only those loan products from their financial institution. Usually, they are paid through wages with an additional commission for the mortgage they have initiated.

The loan officer assists the customer with the procedures for the loan request since they are accustomed to the mortgages available to the lending institutions. You'll need to fill out your loan application, gather your financial documents, and prepare yourself for the underwriting process. Unlike mortgage brokers, they do not offer comparative choices among the financial institutions. Instead, they emphasize assisting the potential borrower in identifying which mortgage products a potential borrower might be eligible for and the ones that a borrower will be able to pay off. They also know the banking industry's rules and how they will be applied to each loan application.

Whether you are refinancing or making a home purchase, a loan officer will look to place you into either a conventional loan, a jumbo loan, or an FHA (Federal Housing Administration) loan. You will want to minimize your rate, the cost you pay out to the loan officer, and any origination fees that will be part of closing costs.

When Is the Right Call for the Loan Officer?

Suppose the customer chooses the financial or lending institution for their mortgage application. In that case, they will likely be appointed to the loan officer, an employee of the financial institution who will assist and lead the customer in collecting all the vital documentation and evidence needed not simply to be eligible for the mortgage but until the point of obtaining the home loan. They will also act as a campaigner and coach for customers to victoriously and efficiently finish their mortgage.

Everyone’s Situation Is Different, So Make the Right Choice for You

So we’ve broken down the differences between mortgage bankers, brokers, and loan officers. Remember, with loan officers, your application goes right to their company’s underwriting department, meaning they’re the intermediary that will help you get through closing.

In that way, loan officers and mortgage brokers are very similar. The most significant difference between the two is during the early phases of your home loan shopping when you're trying to zero in on the best rates and terms possible.

Your best bet: Talk directly to your mortgage team. This is where a lender like Rate Simple surpasses everyone else: Accessibility and transparency are cornerstones of Rate Simple's daily operations. For this reason, we recommend them as a first touch point in your mortgage quest. With some of the lowest rates and best terms in the mortgage industry, they're a great place to start, regardless of whether you are refinancing, making a home purchase, or looking for FHA and VA options. They truly have it all.

Final Thoughts

Looking for somebody who can help you explore your best options regarding your mortgage application? The mortgage broker, mortgage banker, and loan officer all have the ultimate purpose of assisting prospective clients in attaining mortgage financing successfully. Other times, clients prefer to engage all three to ensure the best loan. Whoever you choose, we are here to assist and support you in finding the perfect mortgage for your desired property!

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