We look at 15-year mortgages, house hacking and more.
What is a mortgage banker?
A mortgage banker is someone who originates home loans. The mortgage banker might keep the loan or sell it to an investor. Additionally, a mortgage banker might decide to service the loan itself or sell the rights to another company.
A mortgage banker can be an individual or a large company. The banker unusually will provide the funding for a person’s loan. Mortgage bankers often are confused with mortgage brokers, although they are very different.
While a mortgage banker reviews and accepts (or denies) your home loan application directly, a mortgage broker acts as a middleman. A broker will review offers from a variety of bankers and lenders to find you the best deal and typically charges additional fees for its services. A banker can approve or deny a loan; a broker can’t.
Once the mortgage banker decides to approve your loan application, the banker can decide to service the loan, meaning you make payments directly to the banker, or it can sell the loan, meaning you make payments to a different company.
Along with providing conventional home loans, a mortgage banker can offer a wider variety of mortgage options. Some banks offer jumbo home loans, which is a loan that’s above the conforming limits set by Fannie Mae or Freddie Mac. Due to their large value, jumbo loans are more difficult to get through a broker.
Mortgage banker example
If you’ve gotten an offer for a mortgage from your bank or credit union, you’ve seen an example of a mortgage banker in action. Customers that have an established relationship with a bank or credit union are likely to get better home loan offers when it comes to loan terms and interest rates.
If your own bank or credit union doesn’t offer home loans, you can seek out a loan from an institution that does. Three of the largest banks that offer mortgages in the U.S. are Wells Fargo, Chase and Bank of America.
Although a typical bank or credit union also can be a mortgage banker, it’s also possible for the lender to be its own entity. For example, Quicken Loans is among the top five mortgage lenders in the U.S., but it isn’t a bank. It only offers home loans.