Brokers help match you with a lender, but they don’t approve or fund loans.
Jump to insightA lender reviews your application, approves the loan and provides the funds.
Jump to insightCompare offers from at least three lenders if you opt to work directly with a lender.
Jump to insightWhat is a mortgage broker?
A mortgage broker is a person who works with a variety of mortgage lenders. Brokers act as a middleman between a lender and a borrower, helping the borrower find the best loan for their needs and efficiently apply for a mortgage. Brokers advise you on what documents to submit and assist you in collecting and submitting them to the lender.
Expect to pay 1% to 2% of the loan amount if you go with a broker.
“The mortgage broker prequalifies the prospective home buyer, collects documents and determines which program and which lender best suits the borrower's needs,” said Carlos Scarpero, a mortgage broker in Dayton, Ohio. “The mortgage broker also sends the documents to the lender's underwriter and gets updated documents when requested.”
Mortgage brokers charge a fee for their services, typically 1% or 2% of the loan amount. This percentage can be paid upfront or added to the amount of your loan.
How a mortgage broker works
Mortgage brokers begin their work by gathering clients’ personal information, including financial details and goals. Brokers may ask personal questions about retirement plans or when you’d like to have a home paid off to better tailor their recommendations.
Brokers will then compare offers to find a lender that best meets the client's requirements. The broker will then work as a liaison between a lender and the client to make the process as easy as possible, offering their expertise along the way.
What is a mortgage lender?
A mortgage lender is a bank, credit union or online mortgage lender that processes and approves mortgage applications and provides funds to borrowers to buy real estate. Lenders have varying criteria for approving applicants and timelines for processing applications.
The advantages of working directly with a lender are potential cost savings and being able to speak directly to the lender without a middleman. You should consider working directly with a lender if you’re familiar with the mortgage process, have time to apply with multiple lenders and feel confident comparing loan terms, rates and fees on your own.
How a mortgage lender works
When you work directly with a lender, you’ll submit your application and documents to the lender, rather than to a mortgage broker. This information will then go to underwriting, where the lender will determine if you qualify and, if so, what the terms will be. If you want to compare offers yourself, it’s generally best to compare at least three lenders.
When the loan is approved, you’ll work with the lender through closing. After the funds have been dispersed, the lender may continue to service the loan, though many lenders sell the loan to a different institution for servicing.
» COMPARE: Best mortgage lenders
Pros and cons of mortgage brokers
Mortgage brokers can simplify the process and help match you with a lender, but they charge a fee and act as a middleman. Compare the pros and cons of mortgage brokers:
Pros
- Expert guidance
- Shops and compares offers for you
- Applies to multiple lenders for you
Cons
- Fees apply
- Not all lenders work with brokers
- Commission may influence recommendations
Pros and cons of mortgage lenders
Mortgage lenders offer direct communication and no broker fees, but you’ll need to do the rate shopping yourself. Compare the pros and cons of mortgage lenders:
Pros
- No broker fees
- Direct communication
- May offer perks if you already have an account with the lender
Cons
- More work involved for collecting and comparing offers
- May not get the best offer available
FAQ
Is it better to go through a broker or lender?
Whether it’s better to go through a broker or lender depends on whether or not you want help with the mortgage process or whether you’d prefer to shop around and compare offers yourself. If you want help with the process and want to improve your odds of finding a better deal, hiring a broker could be worth the added fees. If you’d prefer to work directly with a lender and not pay broker fees, it would be better to research lenders and compare offers on your own.
» MORE: Mortgage lender vs. bank
Can a mortgage broker get you a better deal?
A mortgage broker can potentially get you a better deal. They don't necessarily have access to better loan terms, but they work with multiple lenders and can help find the one that will provide the best loan terms for each specific borrower.
To find out if a broker is giving you the best deal possible, ask to see loan estimates from all the lenders your broker considered, not just the ones they recommend. That way, you can compare the rates, fees and terms yourself and see whether their advice is really in your best interest.
What factors do mortgage lenders consider?
Mortgage lenders evaluate applications based on factors such as your credit score, income, employment, debt-to-income (DTI) ratio and down payment amount to determine whether to approve the loan and what terms to offer.
Article sources
ConsumerAffairs writers primarily rely on government data, industry experts and original research from other reputable publications to inform their work. Specific sources for this article include:
- Consumer Financial Protection Bureau, “How Does a Mortgage Loan Officer or Broker Get Paid?” Accessed June 9, 2026.
