Mortgage brokers increase competiton in the market place, resulting in lower rates for everyone. Since mortgage brokers obtain their funds from a variety of sources, they allow you to access to a large number of lenders. When you apply for a loan with a mortgage broker, you are effectively applying for loans with all the lenders that mortgage broker is approved with. Mortgage brokers obtain rates at wholesale, mark up these rates by adding points and then quote you a retail rate. Mortgage brokers are NOT employees of the lender, rather they are independent contractors.
Mortgage brokers are free to set their own pricing.
This is because the two brokers may mark up wholesale rates differently. Saves them time and money. The mortgage broker does all the legwork of finding customers, pre-qualifying them and putting together their loan package. As a result, lenders are able to offer discounted pricing to mortgage brokers. Alternative to branch offices.