Banker, Broker, or Direct lender? All are Loan Officers, who is best?

Banker, Broker, or Direct Lender? All are "Loan Officers", who is BEST?

Saint Paul, Minnesota: When you're looking to get a mortgage loan, you may work with a loan officer, but where they work makes a difference! People often confuse the lender types even though all will glean the same results: a new home or new loan. However, it is important to understand the difference between the three types of lenders so you know what to expect from them during the mortgage application process.

[OK]: A Bank loan officer is a representative of one lending institution, the bank, who works to sell and process mortgages and other loans originated by their employer. They usually are limited in what they can offer to only their own products, severely limiting your loan rate, cost, and product options.  These loan officers represent the borrower to just their lending institution and will guide him or her through the selection, processing and closing of mortgage loan. Loan officers can be paid a commission or salary for their services.

[Better]: A Mortgage Broker is an individual or firm that is the middle man between you and the actual lending institution, which can be a bank, credit union, mortgage corporation, or finance company. They will originate your loan; collect your information, then submit your application to one or more real lenders, and work with the chosen lender until the loan closes. They have no money of their own, and no underwriters. Mortgage brokers CAN NOT issue loan commitment letters (only the actual lender can - although most brokers do anyway).  Brokers can receive their fee from the borrower, be paid from the "real lender" if the loan closes, or both.

[Best]: A Direct Lender/Mortgage Banker is an individual or firm that originates, processes, underwrites, issues loan commitments, closes, and funds their own loans with their own money.  Most have in-house underwriters, and have direct access to loan products from all the big national players. If a loan product exists, they can usually offer it. Direct Lenders typically bundle and sell the servicing rights of your loan after closing to giant Fannie Mae or Freddie Mac servicing companies. Most are also able to broker loans if needed, giving you the best of both worlds. 

It is typically pretty easy to become a mortgage broker, while it is much harder to be a direct lender. There are two primary criteria few brokers can meet. The first is typically a seven-figure net worth requirement. The second is an initial audit process that scrutinizes past transactions. You are typically ineligible if predatory lending practices are found, or questionable transactions are uncovered. Our correspondent direct lender status is hard earned and we believe it affords our loyal following of customers many benefits. 

Loan officers with a direct lender will analyze your financial situation to determine which loan is the best fit for your financing needs. Direct lenders can be paid a fee from the borrower, from the lender whom they sell your loan, or both.

Learn more at our website, www.MnBestRates.com