Mortgage Broker vs. Mortgage Banker vs. FDIC Mortgage Lender: What’s the Difference?

When it comes to obtaining a mortgage, several types of professionals can help you navigate the process. The three most common types are mortgage brokers, mortgage bankers, and FDIC mortgage lenders. Mortgage Broker vs. Mortgage Banker: What’s the Difference? While each of these professionals plays a crucial role in the mortgage industry, there are critical differences between them that you should be aware of.

Mortgage Broker

As a licensed mortgage professional, a mortgage broker is a matchmaker between lenders and borrowers. Brokers work with multiple lenders to help clients find the best mortgage products and rates for their unique financial needs and circumstances. Brokers charge a fee for placing the borrower’s loan with a lender, which the borrower or the lender can pay.

A primary advantage of working with a mortgage broker is the access to various mortgage options from multiple lenders. Brokers can also help borrowers with less-than-perfect credit scores, or other unique financial situations find lenders willing to work with them.

The lender with whom the broker originates the loan frequently is also the loan’s servicer for many years, if not permanently.

Mortgage Banker

A mortgage banker is a financial institution that originates and funds mortgage loans using its capital. Unlike mortgage brokers, mortgage bankers use their funds to lend to borrowers rather than acting as a middleman between borrowers and lenders. Mortgage bankers typically offer a narrower range of mortgage products and rates, as they only offer the products and services of their institution.

Mortgage bankers can also offer their clients complete service throughout the origination and funding process because they work with the borrower from the beginning of the process through the loan’s closing. However, shortly after closing, the loan is sold to an investor for servicing.

FDIC Mortgage Lender (Fed Chartered Bank)

We’ve compared mortgage broker vs. mortgage banker, but wait! There’s more! An FDIC mortgage lender is a financial institution insured by the FDIC and authorized to originate mortgage loans. FDIC lenders offer a variety of mortgage products and rates, similar to mortgage bankers.

A significant advantage of working with an FDIC lender is that the loan officer does not need individual state licenses to originate loans. Once employed by an FDIC Mortgage Lender, the loan officer can originate loans in all 50 States as long as they have an NMLS number. Originating loans in all 50 States presents an excellent opportunity for loan officers to grow their business in multiple markets throughout the United States.

Differences and Similarities

While mortgage brokers, bankers, and FDIC lenders work in the mortgage industry, they have critical differences. Mortgage brokers pair borrowers with lenders. In contrast, mortgage bankers and FDIC lenders originate and fund their mortgage loans. Mortgage brokers can access a much broader range of lenders and mortgage products. In contrast, mortgage bankers and FDIC lenders offer their products and services.

One similarity between all three types of professionals is their role in helping borrowers obtain a mortgage loan. Regardless if you work with a mortgage broker, mortgage banker, or FDIC lender, it’s essential to research and choose a professional to help you achieve your financial goals.

Conclusion

In conclusion, understanding the differences between mortgage brokers, mortgage bankers, and FDIC lenders can help you decide about obtaining a mortgage loan or even where to take your mortgage career. While each type of professional offers unique benefits, choosing the option that best fits your needs and financial situation is essential.

If you’re interested in a career in the mortgage business, be sure to read our other recent article “how to become a mortgage broker: the ultimate guide“!