Knowing the difference between a Mortgage Broker and a Mortgage Banker is easy as ABC!
Would you be able to disseminate between the two? Most can’t…and that can cost you!
Once upon a time, when it came to getting a home loan, most of us would simply pack up the family in the old station wagon and visit our local bank…after all, that’s where your Mom & Dad banked and their Mom & Dad; it’s where we kept our money!
Fast forward about 30 years and now you can find a wide variety of options for financing your home including credit unions, non profit and for profit trade organizations and even the folks who handle your investments can now help you get a loan for that dream house of yours!
There’s certainly a lot to choose from and a lot of money to be made which is the very reason why you need to know the difference between a Mortgage Banker and a Mortgage Broker…and most importantly, how it affects you!
Between money off of the interest you pay and the fees that you are charged to close your loan, it’s had to know what is the best direction to go. At Hometown Lending Lynnwood, we understand the confusion and with all these options…where do you even begin?
Basically, you can approach a mortgage banker or lender directly, or you can go to a mortgage broker.
The mortgage banker is the lender and the one making the loan directly. Thus, going directly to a mortgage banker may limit your options on programs…possibly confining you to a loan that isn’t exactly right for you! If their rates and fees are higher than your other options…you could be paying more! It pays to look around at different Banks if you are going with this option.
A mortgage broker serves as a sorta matchmaker for the borrower and the Bank. The value most mortgage brokers have for todays home buyer is their ability to ‘Broker’ the loan to a variety of approved lenders to find that loan program that is just right for you.
The mortgage broker has access to the products of hundreds of lenders, not just those programs offered by that particular bank.
The mortgage broker and a mortgage banker start off doing the same job! They both run credit checks and gather vital documents like pay stubs and tax returns as well as order title reports and appraisals search and hires the property appraisal. But that’s where the similarities end!
After all the documentation and things like title and appraisal have been ordered, it’s the mortgage broker who has the job of selecting a mortgage lender that will take your application based on your financial data and personal information and give you the better chance of options to best fit your loan needs. In some offices, you will find that the mortgage brokers can also be the lenders but that’s a blog post for another day.
Breaking this all down, the ABC’s of a Mortgage Broker and a Mortgage Banker look like this
Arrange. Mortgage Brokers arrange about 80% of all transactions between borrowers and lenders.
Broker. Mortgage Brokers match borrowers with lenders based on their needs.
Credit. Mortgage Bankers finance the homes loans and distribute those loans to the lenders.
We hope this was helpful in gaining some perspective in knowing the differences you may face in your home loan quest. If you have further questions we can answer, please do not hesitate to contact us directly at 425-678-8608…we are eager to help you in anyway we can!