VA LOAN CAPTAIN BLOG & Learning Center

Brokers and Bankers

By: Grant Moon 05/13/15 11:29 am

Are you getting your VA loan from a mortgage broker or a mortgage banker? Yes, there is a difference and it does affect how your loan is processed and approved but all too often the terms are intertwined or the veteran thinks they’re the same. What are mortgage brokers and how are they different than mortgage bankers?
In short, a mortgage broker arranges financing for a borrower between a direct lender and the borrower. A mortgage banker is a direct lender and the borrower makes an application with that lender. When using a mortgage broker, the borrower provides an application to the broker who then selects a VA lender. The mortgage broker has marketing agreements with various direct lenders and the idea is to search for the best rate and terms then send the loan application to that specific lender. Yet in today’s current market, VA rates are so very close in rate and terms among lenders there really isn’t all that much difference.
A mortgage banker takes over the loan application from the initial application through processing and final approval. The banker uses funds obtained from a credit line to finance the new loan. Most mortgage bankers will sell that loan in the secondary markets to replenish their credit line. There are no middle men when working with a mortgage banker and the rates and terms are just as competitive as any other. What is the biggest difference between the two?
Control. The mortgage banker controls the entire process while the mortgage broker essentially relinquishes control once the loan application is transferred to the selected lender. In the past, the broker would be more involved in the loan process gathering documentation on behalf of the direct lender but in today’s environment, the broker steps aside.

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