Are you buying a house for the first time? If so, you need to know the differences between mortgage brokers and loan officers.
When it comes to a mortgage broker vs loan officer, mortgage brokers act as independent agents. Conversely, a loan officer usually works for a single lender. In other cases, a loan officer can work for a mortgage broker.
Mortgage brokers will connect you with an appropriate lender. They’re also connected to multiple lenders. As a result, you can find a tailored loan that suits your needs.
However, applying through a loan officer can get you a better rate, especially if you have a good relationship with the lender.
This article will help you decide whether to use a mortgage broker or a loan officer. Let’s explore.
A loan officer is in the business of providing information to consumers. When working for a lender, the officer will convey how a borrower can receive loan approval.
When you apply for a loan, you’ll do so through the officer. Then, they will decide if you’re eligible for approval. If you meet the criteria, the officer will send your application to underwriting.
On the flip side, mortgage brokers are in business for themselves. They’re not affiliated with a single lender, but they may work for a lender. In most cases, they have connections to multiple lenders.
- Note: Mortgage lenders are only as good as the connections they have. Therefore, find a mortgage broker with a sizeable lending network.
Brokers usually market their services to prospective clients.
Finding a Better Deal
Even though brokers are independent agents, they’re more aligned with your interests. Overall, you’re more likely to find a better deal with a mortgage broker instead of a loan officer.
Mortgage brokers will develop a close relationship with you as they find a suitable loan package. The job of the broker is to find you the best deal possible.
Since you’re the broker’s client, they will champion your interests harder than officers. Mortgage brokers will also negotiate with lenders to get you better terms and rates.
Moreover, brokers are also usually in touch with the local market than loan officers. However, mortgage brokers must adhere to various guidelines when advising on market conditions. Despite the restrictions, they can still give you tips that help you find a suitable loan.
With a loan officer, you’ll be at a disadvantage in the following ways:
- The interest rate option stems from a single lending institution
- You have limited mortgage choices
- If you’re rejected, you must go through the entire process with another lender
The broker option allows you to choose another lender if you face rejection. Also, the broker will submit your application to another lender, sparing you the hassle of going through the loan application process again.
However, loan officers have connections of their own. Officers can connect you with down payment assistance programs. Plus, your officer may get you a special exemption.
- Example: You can get an exemption if you have a bad credit history. However, the exemption depends on a variety of factors, such as your income documentation.
On the other hand, loan officers primarily represent the interests of the lender. Officers do their best to get you a great deal but only within the confines of the lending institution.
Brokers and officers can help you save time in different areas. For mortgage brokers, they will typically give you a single application to complete.
A broker will spare you from completing multiple lending applications. When you apply through a single lending institution, you may have to go through an additional pre-qualification step.
The broker will use your application to pair you with the right lender. Brokers also do most of the research for you. You should also research on your own to see if you can find a good deal.
For officers, they can save time when you reach the closing phase. Loan officers can process your paperwork faster and get you into your new home sooner. Further, loan officers will provide you the loan directly.
Brokers don’t provide loans, acting as middlemen between you and the lender. This means the broker has no sway over the approval process. A loan officer has influence over your application and can expedite the process faster.
Also, you’ll be working in-house with a single lender. Therefore, you can receive faster approval as opposed to working with multiple lenders.
You can trust brokers and officers equally. Both types of professionals must undergo a rigorous screening process. Mortgage brokers and loan officers must meet minimum federal standards.
To receive payment from the loan, they must take coursework and pass a mortgage exam. Brokers and officers must also submit copies of their credit reports when obtaining accreditation.
They must also submit their mortgage background to national bases, such as the Nationwide Multistate Licensing System (NMLS). Additionally, they will submit to an FBI background check. You can learn more about finding a broker or officer by visiting the NMLS online.
Mortgage Broker vs Loan Officer: What’s the Verdict?
When it comes to a mortgage broker vs loan officer, a broker can give you additional options. Brokers are independent agents connected to many lenders. Loan officers are affiliated with a single lender in most cases.
By choosing an officer, you have limited options overall. With that, loan officers can process your application faster and get you some favorable terms.
Interested in reading more? Read more on our blog to gain insight into other mortgage and financial topics.