Is there a difference between the services a mortgage broker and a loan officer provide? For example, when getting a home loan, is working with one better than working with the other?
While a mortgage broker and loan officer will ask financial questions, guide you through the mortgage application, and assist with getting the loan processed, there are differences between how the two operate. Learning the differences between the two roles can save you time and money.
What is a Mortgage Broker?
A mortgage broker is typically an individual who works for a mortgage brokerage firm. They act as a “middleman” between the borrower and the lender. A mortgage brokerage firm will have relationships with many lenders, allowing them to “shop” your loan and find the lender with the best rate or mortgage program to suit your needs. The mortgage broker will submit your application to the lender, which may be a bank, credit union, trust company, or private investor, and they will work with that lender to close the loan.
A mortgage broker can save borrowers time during the application process and potentially money over the loan’s life. In addition, some lenders work privately with mortgage brokers, giving borrowers access to loans that would otherwise not be available.
What is a Loan Officer?
Loan officers work for mortgage lenders, helping to explain the options mortgage lenders have available. Loan officers have excellent knowledge of lending products, industry rules, regulations, and the documentation borrowers need to obtain a loan.
Loan officers help borrowers determine the best options for their needs based on their financial circumstances. Once a borrower decides on the loan that best suits them, a loan officer will help prepare the loan application.
The loan officer will submit your completed application to the underwriting department for approval. If the loan application is approved, the loan officer is responsible for assisting with the preparation of appropriate documentation and closing documents.
What are the Differences between a Mortgage Broker and Loan Officer?
Loan officers work for one lender and can only write the types of loans their employer offers. On the other hand, mortgage brokers often work within a mortgage brokerage firm or independently and deal with many lenders and different types of loans.
Mortgage brokers have the ability and access to give borrowers access to a broader selection of loan types, unlike a loan officer. Since a loan officer works for only one lender, the selection of different combinations of interest rates, mortgage points, and lower fees on loan products offered may be smaller.
The Bottom Line
Working with one over the other depends on the borrower’s financial situation. As a borrower, meeting with several loan officers and mortgage brokers to see what is offered based on your financial situation is vital. In addition, consider the fees and commissions you will have to pay when working with one or the other. It is also essential to consider the interest rates, closing costs, down payment, and additional potential fees.
Spend time researching and learning the best deals available to you. Paying for a mortgage is a long-term commitment, and getting it right is essential.
We specialize in conventional home mortgages, FHA, VA, and USDA mortgage options, refinance loans, and reverse mortgages. We’ve worked extensively with cash-out refinancing, and help clients to lower their monthly mortgage payments.