Who Is Better – Mortgage Banker Or Mortgage Broker?
In a time that seems so long ago, when you applied for a mortgage, it was assumed you would go to your local bank — the institution where you kept your savings and checking accounts – to also obtain your home loan. I can’t exactly put my finger on the time period where this changed but we are now in a more modern era and the process is usually quite different.
Yes, banks and credit unions still have a large market share for mortgage origination, a larger chunk of market share is now occupied by companies whose business is specifically to originate mortgages.
As one can imagine by looking at the number of competitors in the market place, there is a lot of money to be made by the companies that provide or find mortgages for home buyers, not only on the interest, but also on closing costs and other fees. When looking at companies specializing in mortgage lending, there are two basic categories of mortgage originator…www.toprankinmortgages.com/
Mortgage Banker and Mortgage Broker.
Lets look at the mortgage banker first. When you do business with a mortgage banker you are dealing directly with the company making your loan. Often the term direct lender is used to describe a mortgage banker. The mortgage banker may not be a mortgage servicer, meaning they are not ultimately going to be the company where you make your mortgage payments, but it is their underwriting decision to determine if your loan meets the guidelines of approvability. Although a mortgage banker is typically limited to the products they will offer to borrowers, many mortgage bankers maintain relationships with “wholesale” lenders where they can broker loans should a borrower’s request or borrowing profile not meet their own mortgage loan offerings.
In today’s mortgage market, mortgage banker underwriters generally make their decisions based on the guidelines set by agencies (FHA, VA, Fannie Mae, Freddie Mac). The trade association affiliated with mortgage bankers is the Mortgage Bankers Association of America.
Next we will look at the Mortgage Broker
A mortgage broker serves the same needs as a mortgage banker but in a different manner. The mortgage broker is not a lender, does not make the ultimate decision to approve or decline a mortgage application but has the luxury of drawing from a large pool of lenders for borrowers to find the right match and obtain mortgage loan approval.