Mortgage Banker or Mortgage Broker – What’s the Difference?
Mortgage Banker
Richard Blair
Published on May 4, 2021
Mortgage Broker Versus Mortgage Banker

Mortgage Banker or Mortgage Broker – What’s the Difference?

When you’re searching for a mortgage loan originator to purchase or refinance your home, you need to consider many distinct factors. Of course, you want to secure the best loan terms and interest rates. But you also want to ensure you are working with someone who understands factors affecting the local market, who understands your financial goals and needs, and is available when you need them.

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With so many factors already on your mind, you may not have stopped to consider the distinct types of loan originators you can work with. While they may sound similar, private mortgage bankers, mortgage brokers, and your bank’s mortgage loan officer operate in distinctly separate ways. These differences can affect your interest rate, closing speed, and even your odds of approval.

Before you begin your search for a mortgage loan, it can be helpful to understand the difference between these professionals so you can make the best decision for your financial future. Here’s a brief overview of how these lenders work and what you can expect when working with each of them.

What’s a Mortgage Broker

A mortgage broker is the middleman between borrowers and lenders during the mortgage loan process. They are paid an origination fee for brokering loan deals for lenders but do not personally fund loans. Mortgage brokers tend to be smaller operations, though some direct lenders also offer brokerage services. Brokers only have indirect access to mortgage funds—they do not lend money directly but try to match borrowers with lenders in exchange for a fee.

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When you work with a mortgage broker, you can expect them to walk you through the early aspects of your loan application. They’ll gather information, complete appraisals, and run credit and employment checks before sending the application to a lender to complete the approval, underwriting, closing, and funding.

A mortgage broker’s fees may be paid by either the lender or the borrower. In some situations, borrowers may pay fees up-front, but they are more commonly included among the costs due at the loan’s closing. Consumer protections enacted with the passage of the Dodd-Frank Act in 2010 require loan originators, such as mortgage brokers, to disclose these and any other fees in advance of closing. Dodd-Frank also ensures that brokers who receive borrower-paid fees for a loan may not receive compensation from the lender for that same loan.

What’s A Mortgage Banker

A mortgage banker may be an individual or an institution that originates home loans. Unlike mortgage brokers, mortgage bankers extend loans to borrowers using their own funds. Because mortgage bankers originate and fund loans, they have greater decision-making authority than brokers and are able to set their own interest rates and approval guidelines.

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When you work with a mortgage banker, they will complete the entire loan process in-house, including processing, underwriting, closing, and funding the loan. There is no go-between when you work directly with a mortgage banker, making communicating much faster and effective than the months-long game of telephone that can occur between lenders, brokers, and borrowers. Both the borrower and the mortgage banker can clear up questions or gather missing information easier with direct contact, which often leads to quicker mortgage approval and closing.

If you have a complicated application that requires a closer look or an exception before it can be approved, it’s beneficial to work with a private mortgage banker. Because they are funding the loan, they have the authority to make exceptions and decisions that brokers or loan officers at big banks cannot. And, because mortgage bankers earn money in several ways beyond a loan’s origination fee, they are incentivized to provide the best service and products to borrowers.

Mortgage Broker Versus Mortgage Banker

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Why Choose A Mortgage Banker Over A Mortgage Broker

After the financial crisis of 2008, the practices of some mortgage brokers received some much overdue scrutiny from both the American public and the government. Of particular concern was the question of whether brokers and borrowers were aligned—in many instances, unfortunately, unprincipled brokers sought to secure loans that guaranteed them the highest compensation even when borrowers could not afford to repay them.

Before and after the housing crash, many borrowers believed they could secure the best deals on their loans by working with a broker who could shop around for the best rates and terms. While a broker may be able to cut down on your legwork when applying for a loan, there’s no guarantee they’ll always get the best rate available. Many lenders offer borrowers and brokers the same products, and some lenders have products that they only make available directly to borrowers, which brokers cannot access.

When you work with a mortgage broker, your initial application may be the only document in your broker’s name, and you may not learn which institution is funding your loan until you receive your loan disclosures. While some initial processing may be done at the brokerage, loan disclosures, underwriting, closing, and funding your loan is all completed by the lending institution. Brokers also don’t have control over the loan approval process or timeline for closing.

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Because mortgage bankers fund loans directly, they can often offer faster approval and competitive fees. And since mortgage bankers make their profit beyond the origination fee, and may even be the servicer of your home loan, borrowers can feel more secure that they are getting the best deal available to them—and one that’s in their best interests.

Richard Blair Mortgage Team Of Dwell Mortgage Is Phoenix, AZ’s Go-to Local Mortgage Banker

Dwell Mortgage and the Richard Blair Mortgage Team offer Arizona borrowers a hybrid mortgage banking experience that combines the best of both the mortgage banking and brokerage worlds. In partnership with dwell Mortgage, we have the great flexibility of the mortgage broker to match borrowers with the best loan programs and interest rates while maintaining control of the loan process from start to finish.

Operating under this Hybrid model, the Richard Blair Mortgage Team is able to provide the best customer experience to every homebuyer we work with. We believe in fully educating our clients and empowering the best financial decisions for their families and their futures. We place the highest value on keeping the human touch in our business. We pair our high-touch methods with innovative technology and automation that simplify the home loan process and remove much of the uncertainty and stress that goes with buying or refinancing a home.

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With more than 20 years of experience, Richard Blair and his Team are committed to providing the best experience possible to our clients throughout every stage of the mortgage process. We pride ourselves on providing constant communication, personal attention, and cutting-edge technology to ensure you have complete insight into your various loan options and are empowered to make the best financial decision.

The knowledgeable staff at the Richard Blair Mortgage Team, and dwell Mortgage, are happy to answer any questions you may have and always ensures you’re informed about your application and loan. We aim to make your mortgage experience faster, easier, and more transparent than you’ll find anywhere else. Do you have questions about pre-qualifying for a mortgage loan? Call us at 480-542-1085 or send us a message today!

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Mortgage Banker
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