MORTGAGE BROKER vs. LOAN OFFICER: WHAT’S THE DIFFERENCE? When you are ready to apply for a mortgage loan, you may work with a Loan Officer or you may choose to work with a Mortgage Broker. Homebuyers often do not understand the difference between a mortgage broker and a loan officer even though both are working toward the same results…a new home for you. However, it is important to understand the difference between the two types of jobs so you know what to expect from them during the mortgage application process.
What is a Mortgage Broker? Mortgage Brokers are licensed professionals that work as an independent agent to help you, the consumer, find a loan that fits your needs. They act as a middle man between you and many lenders and can offer more mortgage options to fit almost any situation. As part of the Pre-Qualification Process, a mortgage broker will analyze your financial situation to decide which lender is the best fit for your loan needs. He or she will send your mortgage application to the lender for approval and will work with the chosen lender until the loan closes. He or she receives a commission when the loan closes.
What is a Loan Officer? A Loan Officer is an employee of a lending institution, such as a bank, who works to sell and process mortgages loans originated by their employer. A loan officer is not required to have a license to work in the mortgage industry. Loan officers represent the borrower to the bank and will guide the customer through the processing and closing of mortgage loan. They too have a variety of loans types to draw from, but all originate from that specific lender. If the borrower’s situation does not “fit” into the bank’s underwriting box; the application may not get approved. Loan officers are paid a commission and/or a salary for their services.
So Who Should You Work With? I have worked as a loan officer for a regional savings & loan, as Sr. Mortgage Officer for a large credit union, as a mortgage originator for a national direct lender and now I am happy being a Mortgage Broker because I have the options I need to best serve my clients. Call me biased if you like, but here are a few reasons to consider Mortgage Broker vs a Loan Officer:
Loan Officers and Mortgage brokers analyze each home buyer’s personal and credit situation to decide which lender is the best fit for that person’s needs. A good mortgage broker can find a lender for just about any type of credit. The broker works as an intermediary between the buyer and chosen lender until the loan closes.
Mortgage brokers are licensed professionals who must pass difficult national and state exams and a criminal background check to originate mortgage loans. They must take continuing education courses and keep a certain degree of personal financial responsibility to renew their license each year. Bank loan officers have no such need.
Banks tend to be product oriented. They have only their programs to offer and, if you don’t “fit into the box” or don’t like them, they’ll send you away having wasted your valuable time. Good mortgage brokers are accustomed to comparing and contrasting loan programs – finding the best one for your situation, regardless of the lender.
Banks may not see enough of the credit challenged borrowers to offer the advice and information they need to get back on track for a more solid loan applicant. Good mortgage brokers are willing to work with clients months in advance to help prepare them for a mortgage application.
Conclusion There should be a chemistry that develops between you and the broker or loan officer. Make your choice of a lender based on the trust that you build in each other. Be honest and straight forward about your plans and expectations. Don’t be afraid to ask as many questions to be sure you understand the process. Check out the broker or lender on-line. See what past clients and business partners have said about them Ask your real estate agent, your friends and co-workers friends who have recently bought a home for a referral.
And, as always, if you have other concerns, do not hesitate to Contact Me for advice and direction. It’s FREE!