Lenders, mortgage brokers and loan officers, what's the difference?

Who you choose for your home loan matters -- lenders, mortgage brokers and even loan officers are not the same

In the agent/broker real estate sales world when you’re new, who you work for is important to your training and so is brand name recognition to prospective clients.  As you gain experience and a client database many agents transition to being their own broker or associate with a smaller "local" broker.  

How your clients sees you now changes from --big name brokerage first/then you— to you first/then the brokerage.  Moving away from the big name broker allows you the freedom and increased commission split to do things your own way.

Loan officers (MLOs) follow the same path.  Working as a loan officer for a big-name lender or bank means less loan process control, rigid rules, loan programs limited to what that lender offers, and management pressure to "push" buyers into loan programs beneficial to that lender's bottom line.  

And when MLOs have the experience and customer databases they too can transition to operating as a mortgage broker—or working for one.  And that means more loan process control, better buyer loan options from dozens of different wholesale lenders and best of all-lower loan rates and fees to home buyers.

Why mortgage brokers have lower rates and lender fees than banks and big name lenders

It is very simple--mortgage funds originate from the mortgage backed securities market for both mortgage brokers and lenders alike. The wholesale cost of these funds is basically the same to all --so a bigger lender or bank gets very little benefit from their size & volume.  And even if they did it gets swallowed up by their higher costs.

That's because the bigger the lender, the bigger their overhead with huge corporate, management, and advertising costs they must pass on to borrowers.  It's marketing 101 -- the higher your operating costs, the more you need to charge the consumer.

Why the loan officer matters more than the lender

It's no secret --getting a home loan is a hassle.  Nobody likes a lender digging into their entire employment, financial & credit history.  And all of that with a confusing process that often makes little sense to many buyers and even agents.  

A loan officer who simplifies the process while fully answering every question with easy to understand details is what reduces that hassle.

And only the loan officer can do that--not some faceless lender.

A good loan officer makes it easier---- a great one  makes it a breeze and a bad one  makes it a nightmare.