Mortgage Banker vs. Mortgage Broker - Which One is Right for You?

Sheryl Landrum
LoanBiz Columnist


I often am asked what the difference is between a mortgage banker and a mortgage broker and which one is better to use. Here are the differences between the two so you can choose which one is best for you.

A mortgage banker is a direct lender. As a direct lender, mortgage banks control the entire loan process. They originate the loan, underwrite the loan, draw the loan documents, fund the loan, and then sell the loan on the secondary market. Advantages to using a banker are that they have tight controls throughout the loan process and that they allow for more flexibility, quicker response time, and faster and more efficient home loan closings. A disadvantage to using a mortgage banker can be a limited amount of loan options to choose from.

A mortgage broker represents many lenders. Brokers become approved with lending institutions and then act as an intermediary between lenders and borrowers. The advantages of using a mortgage broker are the wide access to different loan programs and loan options, greater flexibility with qualifying a borrower, and tailoring a loan to a specific home loan scenario. Disadvantages are loss of control in the loan process.

The good news for borrowers looking for a home loan is that many mortgage bankers are also mortgage brokers giving the borrowers the benefits of both. When shopping for your next home loan or home equity line of credit, ask your representative if they are a mortgage banker or a mortgage broker; hopefully, you'll discover that they are both.

About the Author
Sheryl Landrum is a Senior Loan Officer with First Capital Mortgage in San Diego and Prudential Realty in Bonsall, California.