Most homeowners turn to mortgage bankers or brokers when they need to buy a property or tap into their home equity. Shopping around and comparing the best rates and terms can help you save a lot of money on a mortgage. Narrowing your list to a few mortgage bankers and brokers can make the process smoother, but it’s good to know what each one does before getting started. This guide will focus on mortgage brokers and also cover the differences between mortgage bankers and brokers.
Key Takeaways
- Mortgage bankers originate and fund mortgages.
- Applying for multiple loans can help you find the mortgage broker with the best rate and terms.
- Buyers should know the differences between mortgage bankers and brokers before taking out a home loan.
What Is a Mortgage Banker?
A mortgage banker helps you with every step of the mortgage process. These entities provide financing under their name and originate loans. They either use their funds or capital from another lender to facilitate the deal. Mortgage bankers stick around from your first monthly payment to your last one.
What Services Do Mortgage Bankers Provide?
Mortgage bankers offer several services for consumers. These are some of the highlights.
Originating Loans
Mortgage bankers review borrowers' applications to determine if they qualify for financing. These bankers have underwriting teams that assess each individual’s credit score, financials, and other details before offering a loan.
Servicing Loans
Mortgage bankers facilitate escrow payments and receive monthly mortgage payments from the borrower. The mortgage banker is involved throughout the process until you refinance or pay off the mortgage.
Selling Loans
Mortgage bankers can sell your mortgage to the secondary market. If this occurs, your monthly payment and terms will remain the same. However, it changes who you have to contact for customer support and where you send your monthly mortgage payments.
Mortgage Banker vs. Mortgage Broker
The differences between mortgage banks and mortgage brokers are straightforward. Bankers and brokers can originate loans, but the mortgage broker acts as a third party. Mortgage bankers take a more active role and finance the mortgage. Mortgage brokers don’t have the capital to finance a mortgage, but they receive a commission by working with mortgage bankers and closing deals. You may work with a mortgage broker to find competitive rates when looking for a home, but mortgage bankers can help you with every step.
Mortgage Banker vs. Loan Officer
Loan officers work for banks, credit unions, and other mortgage lenders. They can provide various financial products, including FHA loans and VA loans. However, a loan officer is restricted to the types of loans that their financial institution provides.
Mortgage bankers have more flexibility with the types of loans they can offer. Mortgage bankers may be a better choice if your loan does not conform to the requirements set by Fannie Mae and Freddie Mac.
What to Do After? - Find the Right Mortgage Lender
Finding the right mortgage lender doesn’t guarantee that you will get financing. You can use these strategies to boost your chances of getting a home loan and securing a more competitive rate.
- Boost your credit score: A higher credit score will help you qualify for more mortgages and result in better terms. A good payment history is the most decisive component of a good credit score. Paying off other debt can also strengthen your credit score.
- Compare loan options from different lenders: Don’t settle with the first offer you find. Comparing rates and terms from various mortgage lenders can lead to much savings in the long run.
- Get preapproved: A preapproval takes more effort than a prequalification, but it offers a better estimate of how much money you can borrow. During the preapproval process, a mortgage lender reviews your finances to determine how much you can receive.
Find the Best Mortgage Lenders From Benzinga’s Top Providers
You can choose from many mortgage lenders. These are some of the top home loan providers to consider.
Get the Right Mortgage for Your Home
Mortgage bankers can guide you through the process and give you the financing you need. Comparing rates and terms from various home loan providers can lead to lower monthly payments and free up some of your budget for other expenses. It’s good to be patient throughout the process instead of rushing for the first offer you find.
Frequently Asked Questions
Are mortgage bankers regulated?
Yes. The Federal Trade Commission regulates mortgage bankers.
Do mortgage bankers work for banks or other financial institutions?
Yes. Mortgage bankers work for banks and other financial institutions.
How do you choose a reputable mortgage banker?
You should compare rates and terms from multiple mortgage bankers before deciding on the right one.
About Marc Guberti
Marc Guberti is an investing writer passionate about helping people learn more about money management, investing and finance. He has more than 10 years of writing experience focused on finance and digital marketing. His work has been published in U.S. News & World Report, USA Today, InvestorPlace and other publications.