Mortgage Broker

A mortgage broker is a licensed middleman who shops your loan application across multiple lenders to find you the best rate and terms — they don’t lend their own money, but they can save you serious cash by making lenders compete for your business.

How Brokers Work

You fill out one application with the broker. They submit it to their network of lenders — sometimes 20 or more — and bring back the best offers. The broker handles paperwork, coordinates with the lender, and guides you through closing. They get paid through lender-paid compensation (built into your rate) or a borrower-paid fee, but not both.

Federal rules cap broker compensation and require full transparency. You’ll see exactly what they earn on your Loan Estimate.

Dollar Example

A broker might find you 6.625% from a wholesale lender while the retail bank down the street quotes 6.875% for the same loan. On a $350,000 mortgage, that 0.25% savings is $57/month or $20,520 over 30 years. The broker’s compensation — typically 1-2% of the loan — comes from the lender’s wholesale margin, not from a higher rate.

Watch Out

Not all brokers are created equal. Some have limited lender networks or push borrowers toward lenders paying the highest commission. Ask your broker how many lenders they work with and how their compensation is structured. A good broker shows you the rate with and without their fee so you can see the cost transparently.

Brokers also can’t typically offer in-house loan products like portfolio loans or niche programs from banks. If you need something unusual, a direct lender might have more options. Compare your broker’s best offer against a couple of direct lender quotes using our comparison tool.

Frequently Asked Questions

Is a mortgage broker better than going directly to a bank?

For most borrowers, yes. A 2024 study by the National Bureau of Economic Research found broker-originated loans averaged 0.31% lower rates than retail bank loans. But if your bank offers relationship pricing (rate discounts for existing customers), or you need a specialized loan product, direct might win. Get quotes both ways and run them through our mortgage calculator.