A bank lends its own money on its own programs. A broker compares many lenders for you and takes the loan to the one that fits. Neither is always cheaper, and the cost of each is shown the same way, on the Loan Estimate.
Side by side
| Mortgage broker | Bank | |
|---|---|---|
| Loans offered | Programs from many lenders | The bank’s own programs |
| If you’re turned down | The broker can take the file to another lender | You start over elsewhere |
| Pricing | Wholesale pricing from several lenders | The bank’s retail pricing, sometimes with relationship discounts |
| Specialty loans | Often: self-employed, investor, condo and credit programs | Limited |
| How the loan officer is paid | By the lender or by you, never both, set before you apply | Salary and commission from the bank |
| Who services the loan | The chosen lender, or whoever buys the loan | Often the bank, though many sell their loans too |
When a mortgage broker fits
- Your situation is anything but simple: self-employed, investor, condo, credit or large loan.
- You want several lenders compared without applying to each.
- You were turned down or priced high elsewhere.
When a bank fits
- You have a strong relationship and discounts at your bank.
- You want the loan serviced by the bank you already use.
- Your loan is simple and the bank’s price is competitive.
Guides and calculators
- Mortgage FAQ
- Today’s average mortgage rates
- Loan offer comparison calculator
- Closing costs and cash to close calculator
- Conventional loans
Questions
Is it worth using a mortgage broker?
Usually, when your loan is anything but simple, or when you want several lenders compared without applying to each. For a simple loan, compare a broker’s Loan Estimate with your bank’s and choose on the numbers.
What are the downsides of using a mortgage broker?
You don’t choose the lender that will service the loan, and a broker who works with only a few lenders adds little. Ask how many lenders they compare and see the Loan Estimate before you commit.
Is a mortgage broker cheaper than a bank?
Often, because brokers get wholesale pricing from several lenders, but not always. The Loan Estimate shows the rate, the APR and every fee the same way for both, so compare those side by side.
