Where to Borrow: What’s the Difference Between a Mortgage Banker, a Broker and a Bank?
07 Mar 2017
A mortgage banker, also known as a direct lender, will take your loan information and work within their company to underwrite and to provide the funds for your home loan. Direct lenders are specialists at what they do. Finally, direct lenders combine many of these loans together and sell them to investors.
• A mortgage broker will take all of your information and send that information in a package to another company to fund the final loan.
• A bank that offers mortgages is much like a mortgage banker in that they underwrite and fund the mortgage, and they may also service the file.
The primary difference between a bank and a direct lender is that banks have many other departments and are not necessarily experts with regards to mortgages. Focus your interview with mortgage brokers and mortgage bankers. These professionals work with multiple investors daily to ensure the best deal for the consumer, as opposed to a bank. A bank may offer only special loan products that they have in-house at the price for that day. A mortgage banker assumes responsibility for their clients to originate, package, process, underwrite and fund the loan.
Another way of saying this: a mortgage banker provides the money to the borrower at the closing table.
A mortgage banker provides the cash to lend you. A mortgage broker usually has multiple investors that they deal with, and a mortgage broker does not lend money. Rather, mortgage brokers are independent contractors who offer the loan products from many different lenders.