Mortgage Broker Vs. Mortgage Banker

Many consumers think that “mortgage companies” are banks that lend their own money as mortgage. But in fact, any company that you deal with might be either a mortgage banker or may be a mortgage broker.

Mortgage Banker: A mortgage banker is a direct lender, which lends you its own money, although it may often sells the loan to the secondary market. Mortgage bankers (otherwise known as “direct lenders”) sometimes keep servicing.

Mortgage broker: A mortgage broker is actually a middlemen; he first does the loan shopping and analysis for the borrower and then puts the lender and borrower together. Most of the lenders by which the broker finds loans do not deal directly with public.

If you go through mortgage banker, you would save the fees of middleman and could make the loan process quite easier. A mortgage banker would give you direct approval of loan, whereas a mortgage broker gives you information second-hand. But anyhow, many mortgage bankers have their own limitation in what they can offer. An in case, if you present your loan application in poor light, it would lead to a bad impression in front of banker. It is not suggested to lie or mislead a lender, but one need to understand that presenting a loan to a lender is just like presenting your taxes to the IRS; all documents should be valid one.

A mortgage broker charges dramatic fee for every service, but then he has access to wide variety of loan programs. He would also have knowledge of how to present your loan application to various lenders for approval. Some of mortgage bankers are brokers as well. As an investor it is always wise to have both mortgage broker and a mortgage banker on your side. You all need to remember that mortgage brokering is an unlicensed profession in many of the states.