What Is a Mortgage Banker?
Let me explain what a mortgage banker is. I'm talking about a company, individual, or institution that originates mortgages. They use their own funds or money borrowed from a warehouse lender to fund these mortgages. Once the mortgage is originated, the banker might keep it in their portfolio or sell it to an investor. They could also service the mortgage themselves or sell those servicing rights to another financial institution. Their main business is earning fees from loan origination, and most don't hold onto the mortgages long-term.
Key Takeaways
You should know that a mortgage banker originates mortgages with their own or borrowed funds. They make money from origination fees and usually work in a bank's loan department. They can approve or reject your application and advise you on the best options. Remember, both mortgage bankers and brokers are loan officers, but bankers use their own funds while brokers connect you to other institutions.
Understanding Mortgage Bankers
A mortgage banker typically works in the loan department of a bank, credit union, savings and loan association, or similar institution. They handle the entire mortgage process with realtors and borrowers, from property evaluation to gathering financial details and securing the loan. As an advisor, they help you choose from their institution's loan options. Importantly, they close loans in their own names using their own or institutional funds. They represent only their institution, so they can only offer loans from there. They're paid a salary by their employer, sometimes with bonuses, and they ensure loans are secure and borrowers are qualified. Larger ones service mortgages, while smaller ones sell the rights. They can make the call on approving your loan, especially in subjective cases.
Mortgage Banker vs. Mortgage Broker
You might confuse a mortgage banker with a mortgage broker since both help with home loans and are called loan officers by the BLS. The key difference is that bankers close mortgages in their own names with their own funds, while brokers are middlemen facilitating originations for other institutions. Brokers don't close in their own names; they shop around for the best loan for you from various lenders, not just one.
What Is the Role of Mortgage Banking?
Mortgage banking involves originating the loan when you apply. The banker can then sell it or keep it in their portfolio.
How Does a Mortgage Banker Get Paid?
Mortgage bankers get a salary from their institution, unlike brokers who take a cut of the origination fee from closing.
What Does a Mortgage Banker Do?
A mortgage banker works with you to select a product, reviews applications, approves or denies requests, and originates the mortgage to get funds to you.
The Bottom Line
Mortgage bankers play a crucial role in the process. They help you choose a mortgage, review and approve applications, and secure the funding you need to buy a home.
