They are both right. The trick is to take advantage of the superior service offered by mortgage brokers in scouring the market on your behalf, while protecting yourself against being overcharged. This column will tell you how to protect yourself. Mortgage brokers are independent contractors who are free to charge whatever they wish for their services. When problems arise, it is because borrowers usually do not realize what they are paying the mortgage broker until they get to the closing table.
Mortgage brokers make their money by adding a markup to the price quoted by the lender.
In general, mortgage brokers set the largest markup they can get away with in each deal. An unsophisticated customer who shows no inclination to shop the competition will be charged more than a sophisticated customer who makes clear an intention to shop. The largest markups are earned on unsophisticated customers who will accept relatively high interest rates. There are two way to protect yourself against being overcharged. One way is to shop multiple sources.