Mortgage Broker vs. Mortgage Banker
by Ellen Cherrill, Cherill Mortgage
In today's marketplace, there are a wide range of choices for residential financing. With so many possibilities, the most common are the mortgage banker or the mortgage broker.
Mortgage Banker
The mortgage banker is the lender; they make the ultimate credit decision. The mortgage banker will present you with that lender's mortgage programs, so you need to speak to several lenders to do comparative shopping.
Mortgage Broker
A mortgage broker serves as a "matchmaker" between the homebuyer and the lender. The broker draws from a universe of lenders to find the right match. The broker is about choice. Typically brokers work with many lenders, scanning the marketplace that often includes local, regional and national lenders. The broker knows that competitive edge of many lenders, often providing more competitive pricing than the mortgage banker.
The lines between bankers and brokers have become somewhat blurred in recent years. Come bankers broker loans, and some mortgage brokers underwrite and close loans with their own funds and sell these loans back to the lenders. In any case, the choices and sources of home financing continue to grow.
In choosing a lender to do business with, some important factors include:
- The accessibility of the loan officer.
- How quickly do they return phone and email messages?
- Is there a back-up source of information when your loan officer is not available?
- Is there a back-up plan if something unexpected arises?
How to Check the Reputation of the Banker or Broker
As money-lending institutions all mortgage bankers and brokers are subject to state regulation. You can check on how the industry is regulated in your state by contacting the state's department of banking or division of real estate. You can check for licensing requirements and check if the particular banker or broker is in good standing.
Whether you choose a mortgage banker or broker, it's a good idea to ask your real estate agent, CPA or family member to recommend a mortgage professional. Purchasing a home is usually the largest purchase a borrower will make and the process can be stressful as well as exciting. But, in the final analysis, it's the individual with whom you are dealing that means the most.