Difference Between Loan Officer, Bank Officer and Mortgage Advisor

Banks versus loan officers versus mortgage advisors dash who do you trust with a refinance or home loan?

This is a very common question and most homeowners or the typical layperson has no idea what the difference is. It’s like the difference between a real estate agent and a REALTOR, most people use the term synonymously. But there are differences between these roles.

Note: In case you’re wondering, the difference between a real estate agent and a REALTOR is both carry a real estate license to buy and sell property, however, a REALTOR has signed on with a specific code of ethics and pays a fee to realtor.com in order to carry the title. Both of them can do the exact same thing though.

Banks:

Banks are depository institutions that offer mortgages as part of their larger financial product. If you already bank with one, which most of us do, refinancing and getting a home loan might be convenient. There are pros and cons to using a big bank

Pros of Using a Bank

• Familiar and Stability

• Easy Access since you already have established accounts

• Possible discount for established relationship.

Cons of Using a Bank

• Limited loan options

• Slower process times

• Less flexibility on underwriting

• Higher volume which could equal limited personal attention

Banks can typically only offer their loan products. They won’t compare shopping across multiple lenders and underwriters. If the bank’s pricing or guidelines don’t fit your profile, there’s very few alternatives. Banks also tend to move at a slower pace because they are so large. They have multiple departments, lots of compliance layers, and centralized underwriting, which can delay Closings. In a volatile rate ERA, delays can actually cost you money. Banks work best with borrowers with excellent credit, simple income, strong banking relationships, and no sense of urgency.

Loan officers

A loan officer is someone licensed to originate mortgages. They may work for a bank but they could also work for direct lenders or a mortgage company. The difference is not necessarily the title but who they represent. Here are pros and cons to working with a loan officer:

Pros of working with a loan officer

• One-on-one guidance

• Better communication

• Faster processing

• Can explain the loan structures better

Cons of Working with a loan officer

• Limited to their employer’s products

• Incentives may favor certain loans

• Quality varies by the individual

Loan officers are like any other profession; They can be great at it or just downright terrible. The difference usually comes down to ethics and experience. A great loan officer will understand underwriting guidelines, pre-qualify you accurately, and communicates with you proactively. Terrible loan officers simply pushed through the applications without a strategy. If the loan officer works for a direct lender, you can still only see that lender’s pricing and products. You might get great service but not necessarily the best deal. Loan officers are great borrowers who value personal service and may already trust a specific lender.

Mortgage Advisors or Mortgage Brokers

Mortgage brokers or mortgage advisors act as intermediaries between borrowers and multiple lenders. Instead of just offering homeowners one product, they can shop around for the best loan across a network of providers, banks, and wholesale lenders. These mortgage brokers are paid directly by the lender, borrowers, or even a combination depending on the regulations and structure. They literally are paid to get you the best deal.

Pros of working with a mortgage advisor

• Access to multiple lenders and rates

• More loan options

• Better flexibility

• Better solutions for complex income or credit issues

• Competitive pricing through wholesale rates

“Mortgage advisors are very effective in refinancing because the small rate differences really matter. Eight 0.25% difference can actually save thousands of dollars over time period advisors can compare those numbers quickly across multiple lenders. They can also be more flexible if guidelines change period if one lender tightens the rules, others may approve the loan so pivoting in the middle of the process is very doable with a mortgage broker.” – Matthew Magnotta, Park City UT REALTOR

Cons to working with a mortgage broker

• Finding the best one might be tricky

• Possible upfront costs

• Requires trust and transparency

As with any industry, you can have terrible mortgage brokers as well but the biggest risk really is choosing an inexperienced broker. There might be a little bit more fees up front, but If they can save you 10s of thousands of dollars if not more over the life of the loan by picking the right loan, they’re well worth it. This is best for homeowners focused on flexibility, long term savings costs, and optimization.