How I work
Mortgage broker vs. bank
When you get a mortgage from a bank, you get that bank's loans at that bank's price. A mortgage broker compares many lenders for you. Here's how that works, how brokers get paid, when a bank can still make sense, and how to compare offers either way.
The difference
| Bank | Mortgage broker | |
|---|---|---|
| Loans offered | That bank's loans only | Loans from many lenders |
| Pricing | One lender's rates | Compares rates and fees across lenders |
| If your file doesn't fit | Usually a no | Can look for a lender whose rules fit |
| Who approves and funds the loan | The bank | The lender the broker places you with |
As a broker with Harbor Financial Mortgage, I shop dozens of lenders. You fill out one application, I compare your options, and I handle the paperwork and the follow-up through closing. The lender I place you with underwrites and funds the loan.
Why shopping lenders saves money
Mortgage rates for the same borrower on the same day can differ quite a bit from lender to lender. Freddie Mac studied this and found that getting just one more rate quote saved borrowers about $1,500 on average over the life of the loan, and five quotes saved about $3,000.
Most people don't shop because it's a hassle. I do it for you on every loan, so you see your options side by side before you choose.
When one lender says no
Lenders don't all follow the same rules. Each one can add its own requirements on top of FHA, VA or Fannie Mae guidelines, called overlays: a higher minimum credit score, stricter rules on certain income, or no manual underwriting at all.
That's why a denial at one bank isn't always a denial everywhere. One buyer came to me after two lenders turned him down because of how his income was structured. I found a lender willing to manually underwrite his FHA loan. He was approved, closed in 10 business days, and got a lower rate.
How I get paid
On most of my loans, the lender pays me, not you directly. Here's what keeps that fair:
- It's a set percentage of the loan amount. Federal rules don't allow a loan originator's pay to go up or down based on your interest rate or other loan terms.
- Never paid twice. A broker can be paid by the lender or by the borrower on a loan, never both.
- No steering. It's against federal rules to steer you to a loan that pays a broker more but isn't in your interest.
- It's on paper. My compensation shows up on your Closing Disclosure.
In plain English: my pay doesn't change based on the rate you choose, so my job is simply to find you the best fit.
When a bank can make sense
A broker isn't the right fit for everything. A bank or credit union may be worth a call if:
- It offers a relationship discount for keeping your money there.
- You need a loan it keeps on its own books, like some construction, lot or unusual property loans.
- It's a credit union with a special program for members.
Already have a quote from a bank? Send me the Loan Estimate and I'll show you how it compares.
How to compare offers
Whoever you work with, compare Loan Estimates, the standard three-page form every lender has to give you within three business days of your application. Look at:
- Interest rate and points: a lower rate can come with points you pay up front (Loan Estimate page 2, section A).
- Lender fees: origination and other charges in section A.
- Cash to close: the total you'll bring to closing (page 1).
- Same day, same loan: rates change daily, so compare quotes from the same day for the same loan type and amount.
You can also verify my license on NMLS Consumer Access before you share anything.
Common questions
Is a mortgage broker more expensive than a bank?
Not usually. Brokers compare many lenders, and lenders compete for broker business. The only way to know is to compare Loan Estimates for the same loan on the same day, which is exactly what I do for you.
How do mortgage brokers get paid?
On most of my loans, the lender pays me. It's a set percentage of the loan amount, and federal rules don't let it go up or down based on your rate or loan terms. A broker can be paid by the lender or by you on a loan, never both, and it's shown on your Closing Disclosure.
Will shopping lenders hurt my credit?
I pull your credit once and use it to compare lenders. If you also shop on your own, credit scoring models generally count multiple mortgage inquiries within a short window as a single inquiry.
Who do I make payments to after closing?
The lender that funds your loan, or the company it hires to service it. That's the same as with a bank, which often sells or transfers loans too. You'll get a notice before any change.
Is a mortgage broker licensed?
Yes. Brokers and loan officers have to be licensed through the NMLS and, in Texas, by the Department of Savings and Mortgage Lending. You can look anyone up on NMLS Consumer Access.
Want me to run your numbers?
I'll compare lenders and show you what you'd pay. No cost to talk.
Applying takes 10–15 minutes online. I usually pull credit within 24 hours, unless you'd like me to wait.
Stuck on a term? See the plain-English mortgage glossary.
Sources
- Freddie Mac: Why are consumers leaving money on the table? (April 2018)
- 12 CFR 1026.36: Loan originator compensation and anti-steering rules
- Federal Reserve: Regulation Z compliance guide, loan originator compensation
- NMLS Consumer Access: Austin Elder, NMLS #1937462
This guide is general education, not a loan offer or legal or tax advice. Program rules, fees and limits change; I check them against the sources above when this page is reviewed. Eligibility depends on your situation, and not all applicants will qualify.