A Loan Officer and Mortgage broker are two well-known entities who work in the home loan industry. For homebuyers, the differences might not be clear regarding a loan officer and mortgage brokerin terms of their responsibility, credibility, benefits and drawbacks.
A loan officer is a professional who works for a bank or a specific lender and writes loans for that institution. A loan officer is also commonly known as a mortgage loan originator, home loan consultant, mortgage banker or mortgage consultant and acts as a salesman for a particular lender. The main responsibility of a loan officer is to recommend the best loan for you with the available options from ONE company or lender, the one which they are working for. During this process, a loan officer will help you with your home loan application and to prepare the documents you require to satisfy the lending criteria.
A mortgage broker is does not work for a particular institution, lender or bank but they act as a bridge between borrower and lender. A mortgage broker is a licensed middleman between the lender and the borrower. They maintain a relationship with many lending companies and suggest the best loan type to the borrower as per their individual financial situation and personal needs. A mortgage broker has multiple options of lenders and loan packages which they can recommend. Once a suitable package is chosen, a broker will guide the borrower until settlement, handling all of the paperwork and interaction with the lender.
While loan officer is limited to offering the available loan products offered by their lending institution, a mortgage broker can recommend other lending options if one lender is not suitable for a borrower’s situation. Therefore, a mortgage broker has access to a wider pool of products than a loan officer.
As to their income, mortgage brokers usually get paid a percentage of the mortgage amount from the lender whereas loan officers are commonly paid with a mix between base salary, commission and incentive targets. Both mortgage brokers and loan officers generally offer their services to a borrower for free. However, borrowers should be wary that brokers aren’t recommending products that are the best fit simply because they stand to make a larger commission. Ask your broker the terms of their commission regarding their recommendations to ease any concerns. Loan officers might also stand to gain a higher return for securing certain loans or for selling other products which the company is selling on top of a home loan (such as insurance or financial planning), therefore it is important to assess any product carefully before entering into any agreement.
If you are looking for personalized consultation to get started with your home loan, contact us today at Ausfinance for FREE tailored advice. AusFinance have access to a panel of lenders and our expert mortgage brokers have combined decades of experience in the housing industry helping our clients in Sydney, Melbourne and across Australia.