What is a Loan Officer?
A loan officer works directly for a bank or other lender; therefore a loan officer is limited to offering only the products available from that bank and are confined to their particular lending guidelines and procedures. A loan officer is not required to have a license to work in the mortgage industry and is typically given bank specific training. Some loan officers are paid a salary and others are commissioned based or some combination of both.
What is a Mortgage Broker?
Mortgage brokers differ from a bank loan officer as they don’t work directly for any one bank. Most mortgage brokers actually have access to over 30 different banks and their various products, giving them the ability to be more broad in their search for the best mortgage and rate to suit their clients needs. Mortgage Brokers are required to be licensed in the province of Alberta and are governed by their licensing body, the Real Estate Council of Alberta (RECA). A mortgage broker is generally paid a commission by the lender for placing the mortgage with them and commission are based on loan amount and term. On occasion, especially in the case of a private mortgage, a mortgage broker may charge a fee to the client but the broker is required by RECA to advise the client in writing the exact dollar amount of the fee and the manner in which it will be charged.
Should I Work with a Loan Officer or a Mortgage Broker?
There is some argument that working with a loan officer may be a speedier process as their is no “middleman” such as a mortgage broker. However, increasingly, many loans officers don’t actually underwrite the mortgages but rather send them to an underwriting department for approval and document review, thereby making them also middlemen, in their internal system. Choice is the obvious difference between the two with mortgage brokers having the advantage of so many lenders and products to choose from, often resulting in better rates and the ability to provide niche products like mortgages for self employed clients.
Both banks and brokers work hard these days to create a positive client experience, banks perhaps providing the comfort of national branding and a broader array of products and services on offer; brokers, being experts in this one particular field, offer a more personal experience as they can focus solely on the mortgage process and closely guide their clients through this exciting but stressful time.
The correct answer is certainly a personal one and there can be a right time for both options. The most important thing is to remember that you are a consumer of this product and it’s important to explore all of your choices when it comes to choosing the right person to obtain it for you.
To explore your mortgage broker options, be sure to contact one of our Licensed Mortgage Brokers today!