Many of us think multiple times when making a big investment in any property. The mortgage industry is getting bigger and bigger day by day. Many of us consider them trustworthy. They save money and time for us. Mortgage brokers and mortgage bankers are the two main entities of the mortgage industry. Some of us think they are performing the same function but not really. They are much different from each other. So in this article, you will find the difference between mortgage broker vs mortgage banker.
Mortgage broker vs Mortgage banker
Entity and working
- Mortgage broker works as a third person between lender and buyer. In contrast, a mortgage banker works as a single entity. They don’t work as a third person.
- A mortgage broker is not an institution, whereas mortgage bankers are a complete institution.
- Mortgage brokers do not work for the bank whereas the mortgage bankers work for banks or lenders
- A mortgage broker does not provide loans. Mortgage bankers offer loans to buyers.
- Now, a mortgage broker does not have direct relations with any institution for loans. A mortgage banker works for a specific bank and acts as a direct lender. So they have direct ties with the loan financing institutions.
- Mortgage brokers need licenses to pursue their services from the relative government. They sometimes get limited to some states. Compared to the mortgage bankers who are not limited to a specific state and specific time zone.
- Therefore brokers are a huge part of the mortgage business and present in many loan organizations and do not close the funds on their names. The mortgage bankers give finance to the borrowers on the retail level and close the funds on their terms.
Client, expertise and focus
- Best of all, mortgage brokers work for a client to shop for a loan. A Mortgage banker work for a specific institution or bank that provides loans to the clients.
- A mortgage broker has full freedom to work with any lender in the market. Mortgage banker does not have the freedom to work with any lender in the market because they work as direct lenders.
- Also, the mortgage broker has the freedom to make a comparison between the bank loans and loans of credit unions. A mortgage banker does not have the freedom to compare the loans of banks and credit unions.
- Mortgage broker deals with the lenders that are present in the wholesale market and with the client. They provide a place for lenders and clients. A mortgage banker only works with the clients directly. They do not need any broker between the client and the lender.
- With the help of mortgage brokers, you will get several rates to shop the loan by meeting with a different lender in the markets. Mortgage bankers can offer you the loans directly and offer you only one rate. So you do not need to go anywhere.
- Mortgage brokers work for the clients, and you will find the best and appropriate price rates at once. However, mortgage bankers offer all the rates and multiple prices only concerning their associated companies.
- A mortgage broker doesn’t get his salary, or you can say that they are given the commission from the loan. Opposite to a mortgage banker, who gets his payment from the associated department or bank.
- A mortgage broker is working on flexible terms and conditions with the clients. However, a mortgage banker works for the bank, so they have strict rules and regulations about the loans and their returns.
- For the most part, mortgage brokers offer the mortgage products from the whole market or sometimes outside the market if needed to the borrower. Mortgage banker, on the other hand, only provides products to the clients that are offered by the financial institution in which they are working.
- You see, mortgage brokers are using the traditional method as well as an automated system for the passing of applications. The mortgage bankers are doing all the loan and application work through a digital system.
- Mortgage brokers charge for their expertise and guidance, whereas mortgage bankers are less expensive than mortgage brokers as they market their own banks and do not share much of their knowledge beyond that.
Decision making and loan approvals
- Mortgage brokers can never have any access to the decision making about the loan for the client. The mortgage banker sometimes has access to the decision-making about the loan and approval for the client.
- The brokers do not interfere in any other process of mortgage except one that is house processing. The mortgage bankers have a complete hold on all the activities from the start to the end.
- In particular, the mortgage broker provides the clients with options that better suits them according to their requirements. Mortgage bankers or banks can not give you a loan approval if they do not consider you a good candidate for the loan.
- You see mortgage brokers are independent and working solely for the client, thus have their own views and analysis. Whereas, the bankers are dependent on the bank or institution in which they are working. They hesitate to share their own views and only talk in the interest of their own bank.
- Lastly, mortgage brokers work on the guidelines provided by the clients. They are less trustworthy people sometimes. Mortgage bankers can work only on the guidelines of the associated financial institution, and the client has to follow them.
Mortgage broker vs Mortgage banker have their pros and cons. You have to make the decision which one works best for you. If you want customized, focused services that are not biased about specific institutions, mortgage brokers are your go-to person. Sometimes if you want a loan in urgency, then the bank may be a better option than a mortgage broker. You have to look at some of the essential factors like cost, interest rates, risk levels, credit score, etc. while deciding for both of them.