Cost Differences between Brokers and Direct Lenders

A broker might charge you an origination fee or broker fee, which can be up to 1% of your loan amount. Direct lenders may not have this specific fee but could include other charges like application or appraisal fees. The cost can vary depending on the lender or broker, so its important to compare all fees.

Brokers earn their money through commissions paid either by the borrower (you) or the lending institution. They may also charge origination points, which are prepaid interest on the mortgage loan. These costs are often included in your loan balance or closing costs, potentially increasing the overall cost of your mortgage.

Sometimes yes, as brokers have access to multiple lending sources and can shop around for competitive rates. However, its not guaranteed as actual rates depend on various factors including your creditworthiness and market conditions. Therefore, it’s still recommended you do comparison shopping yourself too.