Mortgage loans are available from different types of mortgage lenders. Many people are confused by the differences between types of lender, and also by the role played by loan officers. Here is a brief explanation of the parts played by those that may be involved when you apply for a mortgage.
Mortgage brokers do not lend money, but for many are the first person they meet in relation to their mortgage application. Brokers work with many types of mortgage lenders, and will pass your application on to the most appropriate lender for your needs. Fundamentally, a mortgage broker is the interface between you and a number of potential lenders.
For example, if you have a low credit score, a mortgage broker can place your application with lenders that specialize in that type of applicant. If you are seeking specific terms in your mortgage, or perhaps a second mortgage, then a broker will know the best company for you to deal with.
You could bypass the broker and apply for mortgage loans directly with a mortgage lender. If you do that, it might take you longer and you may not end up dealing with the lender that is most suited to your needs.
Mortgage lenders are the companies that actually lend you the money. They may get the actual finance from a bank, but will provide you with the application forms and the mortgage loans will be paid by them. You will pay your monthly repayments to the lender, and it is they who take the action should you fail to pay.
A mortgage broker can have a large number of mortgage lenders on its list. However, the broker does not work for any individual lender. The broker receives a commission from the lender once a client closes a mortgage. As stated above clients can deal with individual lenders personally, or use the services of a broker to get the best deal from a number of mortgage lenders.
The lenders will offer brokers mortgage loans at a lower price than to borrowers approaching them directly. You might not therefore benefit by approaching a lender rather than going through a broker. In fact you could lose out, because a broker can often find a cheaper mortgage loan for your circumstances than you could negotiate yourself.
Mortgage bankers finance mortgage loans with their own money. A lender can pass a loan onto a mortgage banker to finance. The banker can service the mortgage itself or can sell it on to Fannie Mae, Freddie Mac or other investors. Most mortgage lenders are also bankers.
Mortgage Loans and Loan Officers
Loan officers are employed by mortgage lenders and banks. They have a deep knowledge of the different types of mortgages and other loans offered by the lending institution they work for. A loan officer will work with the applicant to arrive at the best mortgage package for that person.
Loan officers are particularly useful where the applicant has an adverse credit record, or is not old enough yet to have developed a proper credit history. They know how to deal with problem cases and extenuating circumstances, and are able to find the best suitable mortgage loans that the lender they work for can offer.
In the course of applying for mortgage loans, it is possible that you will deal with each of the above. You should at least come across two: either a mortgage broker or lender, and the loan officer.