Did you read our blog post on “how to shop for a home mortgage?” If so, you already know you should find your mortgage lender before you start shopping for a home. What you may be wondering now is, “What’s the difference between a mortgage broker, mortgage banker, and portfolio lender?”
A mortgage broker is a licensed and regulated financial professional who works on your behalf to find you the best home mortgage available. Most mortgage brokers have relationships with many lenders and will know which lender is best suited to your financial situation. A broker will handle everything for you, including but not limited to:
- Pull your credit history.
- Help with your loan application.
- Verify your income.
- Verify your employment.
- Gather required documents.
- Negotiate terms with lenders.
Your mortgage broker will stay with you throughout your transaction. They will work and communicate with the underwriting department, the closing agent, and your real estate broker. Your broker will help to keep things running smoothly until your loan is closed.
A mortgage banker is someone who works for a financial institution such as a bank, credit union or savings and loan. They work with you and your real estate broker throughout the mortgage process, and handle everything from evaluating the property to collecting financial information and securing the loan. When you work with a mortgage banker, you are working with a single lender, and may only select from the loan products they offer. Once your loan is closed your mortgage banker can choose to service your loan or sell your mortgage to an investor.
Unlike working with a mortgage broker, if you want to compare various loan options with multiple lenders you will need to work with the mortgage banker of each institution.
Portfolio Lenders tend to be smaller community banks or lending institutions that use their own money to grant loans. They don’t sell the loans they originate to the secondary market, instead they keep them in their own portfolio. Consequently, their lending standards may be more flexible than conventional banks, making them an option for borrowers that don’t meet strict lending guidelines. Portfolio lenders can make decisions based on more than what is on the application; they will also consider long-standing relationships with borrowers. However, they don’t offer all of the loan products found at large lending institutions and might require the borrower to keep all of their accounts with them.
Still have questions? We’re happy to help! Give us a call anytime.