The main difference between these securities is that mortgage brokers are employed by a sponsoring agent, while mortgage loan originators and officers are employed by a bank or mortgage company. Both mortgage brokers and MLOs are nationally licensed by the National Multi-State Licensing System (NMLS). Too Often Homebuyers Don't Understand the Difference Between a Mortgage Broker and a Loan Officer. A loan officer works directly for a lender, while a broker is an independent party who doesn't work for anyone.
This way, a broker can apply for loans from many parties. Loan officers assist clients with the application process and are familiar with the loans offered by their financial institutions. Unlike mortgage brokers, these people don't compare options between institutions. Instead, they focus on helping borrowers find a credit product that they qualify for and can pay for.
They also know the rules of the banking industry and how these rules will apply to each loan application. When you need to get a mortgage, there are so many options that it can be overwhelming. Your choice can have a big impact on the amount of time you spend buying a mortgage and how much you end up paying. By knowing the basic differences between three types of mortgage professionals: mortgage brokers, loan officers, and mortgage bankers, you can find out who can save you the most time and money.
Mortgage Brokers Will Look For Mortgages On Your Behalf. They can save you time and money by looking for the best deals available to someone with your financial profile, assuming you are honest, good at your job, and have relationships with many mortgage lenders. A little confusing, both individuals and companies that fulfill this role are called mortgage brokers. A Mortgage Broker Doesn't Lend You Money and Doesn't Approve Your Loan Application.
However, they will collect information about your income, financial obligations, and credit rating to see what types of loans you might qualify for and which lenders will offer you a loan. If a mortgage broker finds a loan that you want to proceed with, they will be the middleman between you and the lender. They will take your completed application, compile your supporting documents, and transmit any requests for additional information from the lender's underwriting department. Loan officers work for companies such as banks, credit unions, or direct online lenders that lend money to borrowers to buy and refinance homes.
They may be able to offer you several types of loans (Federal Housing Administration (FHA), FHA 203 (k), conventional and jumbo) if the financial institution they work for offers them. They may also be able to offer you different combinations of interest rates, points and opening fees for certain credit products. However, unlike brokers, all of these loans will come only from the loan officer's company, so your selection will be smaller. To receive offers from multiple lenders, you'll need to work with several loan officers at different companies.
If you choose to go ahead, a loan officer will take your loan application and submit it to your company's insurance department. They will be the middleman between you and the insurer, and they will help you close. Throughout these steps, a loan officer performs the same role as a mortgage broker. The Big Difference Between Working With a Mortgage Broker vs.
A loan officer comes at the beginning, during the buying phase, where you are trying to find the best deal on a mortgage. A mortgage banker can originate all types of loans, so you will have many options in terms of loan products, just like you would with a mortgage broker or some loan officers. In addition, they work with all types of applicants, including those who need an FHA loan because of their more relaxed qualifications or military service members who want a VA loan. The best way to choose between a mortgage broker, a loan officer, and a mortgage banker is to talk to all of them.
Many people are intimidated by the unknown mortgage process that they don't turn around. It's a big mistake that can cost you thousands of dollars, if not tens of thousands of dollars. You can and should seek quotes from more than one broker, more than one banker, and several loan officers. Set aside one day, or two consecutive days, to collect all your quotes.
Market conditions change frequently, as does your credit report. You won't be able to make accurate comparisons if you receive quotes days or weeks apart. That said, if you don't have a salaried job, a credit score of 700, and a low debt-to-income ratio, you can save time by bypassing loan officers. If you are self-employed, retired, using assets instead of income to qualify, or belong to some other innovative applicant category, a mortgage broker or mortgage banker may be better suited to you.
They typically have the experience and relationships to quickly find the right funding source and have more options to choose from than loan officers. Loan officers are employees of the lender, while mortgage brokers are independent of the mortgage company. The loan officer usually receives a salary, a commission, or a combination of the two. Mortgage brokers receive compensation from the borrower, lender, or both.
The fees that a mortgage broker receives may not be transparent to the borrower, since they can be paid when a lender charges you a higher interest rate. Mortgage loan originators help borrowers through the mortgage application process. A mortgage broker can ask you questions about your financial situation, such as your credit score and desired interest rate. The mortgage broker also collects the borrower's documentation and passes it to a mortgage lender for underwriting and approval.
Seeking the advice of a mortgage broker can help you get a better idea of the different types of mortgages available. According to Dawn Templeton, a designated broker and owner of Templeton Real Estate Group, most people can get financing to buy a home by contacting an institutional lender directly. An MLO should help ease the mortgage process by guiding you through the steps of buying or refinancing your home and financing your loan. Many people pre-qualify for a home loan months and even years before closing a new home.
Take the time to find the best mortgage lender and be sure to consider offers carefully, including comparing APR and charges and any additional benefits a loan originator shares with you. A loan officer strictly refers to the person who helps you through the mortgage application process, making sure that all documents are completed correctly and submitted on time. They are often called mortgage loan officers, as this is the most complex and costly type of loan that most consumers encounter. A mortgage broker can save the borrower time and effort during the application process and, potentially, a lot of money during the life of the loan.
A mortgage loan originator's salary will depend on several factors, including the company they work for, their level of experience, and the number of mortgage loans they close per month.
