Banks, credit unions, brokers and nonbank lenders, mapped side by side
Mortgage brokers
On the map
A mortgage broker takes your application and places it with one of several wholesale lenders, which funds the loan. The broker does not lend its own money. Brokers are paid either by you or by the lender, and the compensation appears on the Loan Estimate. Brokers and their loan officers are state-licensed and searchable on Consumer Access.
Last reviewed against the primary sources listed below.
Broker versus lender
| Broker | Direct lender | |
|---|---|---|
| Funds the loan | No, a wholesale lender does | Yes |
| Number of lenders | Several | One |
| Compensation shown | On the Loan Estimate | On the Loan Estimate |
Questions for a broker
- Which wholesale lenders do you use?
- Am I paying you, or is the lender?
- Why this lender for my file?
Possible downsides
A broker can only offer the lenders they work with, and an extra party can add a step to communication. Compare at least one non-broker estimate.
Common questions about where to apply
What is the difference between a lender and a mortgage broker?
A lender funds the loan with its own money. A broker arranges the loan with a wholesale lender and does not fund it.
What is the downside of using a mortgage broker?
You are limited to the lenders the broker works with, and you should check how the broker is paid. Comparing with a direct lender's estimate helps.