When we work with buyers, one of the most common questions they ask is, “Who is the best mortgage broker to work with?” Our clients are usually surprised to hear that a mortgage broker may not be their best option. So, who do we recommend? A mortgage banker.
If you’re not sure of the difference between a mortgage broker and a mortgage banker, you’re not alone. Most people use the terms “mortgage broker” and “mortgage banker” interchangeably. In reality, they are two very different things.
A mortgage broker deals with many different wholesale lenders. The broker is an independent operator and can be a one-person office or a large organization with different loan agents acting under the one broker’s license, much like how a real estate office works. Mortgage brokers do not have affiliation with any one company. As a result, they are at the whim of the individual wholesale lenders guidelines, overlays, timeframes, and underwriters. Often, they don’t have strong relationships with underwriters, and communication is not encouraged.
A mortgage banker is also called a correspondent lender. Mortgage bankers are independent offices working under a corporate umbrella where they underwrite and fund/close their loans in their own name. They retain the servicing of the loans or they sell the servicing after closing. Mortgage bankers often have deep relationships with their underwriters, who are dedicated to the team at the mortgage banker’s office. They work in concert with underwriters to ensure each and every possible loan reaches the closing table.
Which is Better?
So which is better, the mortgage broker or the mortgage banker? While the mortgage broker might have been a competitive choice in the past, today’s mortgage programs are more commoditized, which means you really need a mortgage banker working for you. By having a mortgage banker in control of your home loan process, you’ll get better service, more competitive pricing, and often a faster path to closing on the loan.
Remember, you can find many great tips for home buyers on our Facebook page. If you’re thinking about buying a home, we can help! Contact us today! And if you’re ready to apply for a mortgage, we have the perfect resource for you.