Mortgage Banker vs Broker
Mortgage Banker vs Broker is a common question asked by consumers and mortgage brokers alike.
A mortgage broker is an independent real estate financing professional who specializes in the origination of residential and/or commercial mortgages. A mortgage Broker represents many lenders, but does not lend with their own funds. They can represent sources such as banks, pension funds, insurance companies, and savings and loan associations. They will find the best mortgage pricing they have available from various mortgage companies, insert their markup, and ask for that profit at closing. Mortgage Broker has the benefit of representing many different lenders so they have more flexibility in pricing and guidelines. They do not approve the loan nor do they send out closing documents in their own name. The theory is that because a mortgage broker has access to multiple lenders, they have the ability to shop for the best rates.
A mortgage banker is an individual, firm or corporation that originates, sells and/or services loans secured by mortgages on real property. In other words, there are cases where a mortgage banker lends its own money, and other cases where it acts like a mortgage broker and lends money from other sources. There are two types of mortgage bankers- Retail Banker and Correspondent Mortgage Banker.
Retail Bank Established brick and mortar company where you may also have checking or savings accounts. Only have one set of rates that they use- their own. While you may fill out your application at a local office, the processing, underwriting, and funding may be done in another state- or even multiple states.
Correspondent Mortgage Banker which is a hybrid model. A correspondent mortgage banker lends their own money and represents many large, national retail banks. Loans are processed and approved in house and the loan documents are drawn up in their own name.
So, which is better- Mortgage Broker vs. Mortgage Banker?
From a consumer standpoint, there may be no difference. If the same loan is available at the same rate with the same fees, it really doesn’t matter if your loan is brokered or not. It’s not important that someone uses their own money to fund your loan or if they get it elsewhere as long as you get what you were promised.
From a professional standpoint, there are several differences when conducting business as a Broker vs. Banker. As a Broker, your YSP is capped, and that’s your income. Brokers are restricted to originating conventional loan types and must submit files to a lender for approval. As a Banker, a mortgage professional can make an increased amount of income on the file, and still process and control the files in house. As a correspondent, the files are underwritten at the investors office, but loans are closed in the name of the originating mortgage professional. In additional, as a Banker your income opportunities are expanded if you begin to originate Government insured loans such as FHA.
Qualifications to become a mortgage banker vary, but we specialize in streamlining the process and supplying Brokers with all of the necessary documents, procedures, and manuals required to make the process simple and affordable. To find out more about the benefits of Mortgage Banker vs Broker, complete the contact form on the site and a professional will be in contact.