Mortgage broker versus mortgage lender

So what's the difference between a mortgage broker and a mortgage lender? The simple answer is that a lender is the institution that actual lends you the money. A mortgage broker acts as a "middle man", who buys loans "wholesale" from lenders, resells them to the public at "retail" prices, and pockets the difference.

So the broker is just the middle man. Why not just go strait to the lender and save yourself the extra money?

The reason is that mortgage brokers do serve a very useful purpose. When you go to a bank or a lender for a loan, they'll usually have their interest rates fixed. Interest rates for different lenders vary from one lender to the next. Some banks will have extremely low rates for buyers with a large down payment and excellent credit, but will turn down buyers with average credit, or offer them loans with high interest rates.

Mortgage brokers usually work with hundreds of different lenders, and the good ones know which lenders offer the best deals for every time of home purchasing situation.

Truth be told, it's probably in your best interest to shop around at various locations, and that can include lenders and brokers.

These days, shopping for a loan is easier than ever thanks to the internet. As long as you're sticking with reputable companies such as E-loan or Lending Tree, you can be confident that your information is safe and secure.

When you're shopping for a loan, just remember to ask the lender or broker if they are an "upfront" lender, and ask to get a quote in writing.

Mortgage brokers versus mortgage lenders