The Short Version
A bank or direct lender offers you their own products at their own rates. A mortgage broker doesn't lend money directly, instead, they shop your loan across dozens of wholesale lenders to find you the best rate and terms available. Think of it like this: going to a bank is like shopping at one dealership. Working with a broker is like having someone check every dealership in town for you.
How Broker Pricing Works
Wholesale lenders offer brokers lower rates than what they offer directly to consumers. This is because the broker handles the client-facing work, taking the application, gathering documents, guiding you through the process, while the lender handles underwriting and funding. It's a more efficient model, and the savings get passed to you.
By law, brokers must disclose their compensation, and it's typically a flat percentage that doesn't change based on your rate. That means I have zero incentive to steer you toward a higher rate, my compensation is the same whether you get a 6.5% or a 7% rate. That alignment of incentives matters.
When a Bank Might Make Sense
Banks can occasionally offer portfolio products that brokers don't have access to, like jumbo loans with unique terms or special professional programs (doctor loans, for example). If you have a deep existing relationship with a bank (significant deposits, investment accounts), they may offer relationship pricing that's competitive.
That said, in the vast majority of cases, a broker's access to wholesale pricing across multiple lenders will beat a single bank's retail rate. I encourage clients to get quotes from their bank and then let me show them what wholesale pricing looks like, the comparison speaks for itself.
What About Big Online Lenders?
Online lenders like Rocket Mortgage and Better.com are direct lenders with a tech-forward interface. They offer convenience, but they're still giving you one lender's pricing. The rates are retail, not wholesale. And when your file hits a snag (which happens more often than you'd think), having a human who answers the phone and knows your deal inside out makes a real difference.
The Bottom Line
Working with a broker gives you wholesale pricing, access to multiple lenders, and a single point of contact who's working for you, not for the bank. It's the model I believe in, and it's why I became a broker in the first place.