You Should Know Some mortgage sources are direct lenders, such as banks and mortgage banks. Usually banks or mortgage banks will be competitive with one or two loan products and will encourage their sales staff to sell these products to the consumer. Often banks will not even try to be competitive in rate, but will instead try to fill a niche, such as quick approvals or flexible underwriting of loans. Mortgage Brokers work with a large number of lending sources and offer these lenders products through a wholesale arrangement. The Mortgage Broker is compensated by an origination fee.
Direct lenders are captive to their own products.
That is, they will not provide unbiased advice or selection, since by doing so they will possibly risk losing your loan to the company whose product truly provides you the best possible scenario. Mortgage Brokers , on the other hand usually sell a wide variety of products from their multiple lending sources, and can be objective in their recommendations. The compensation provided from one lender is equal to that from another lender, therefore the outcome of the recommendation doesn't matter. What does matter is giving you the best loan for your current financial situation. Banks will underwrite your loan there, and lend their own money, If your loan is declined for any reason, you will need to begin the process again with someone else.