Mortgage Lender vs. Mortgage Broker: What’s the Difference?
When you’re starting the home-buying process, you’ll typically work with either a
mortgage lender or a
mortgage broker—and understanding the difference can help you decide which path best fits your needs.
What Is a Mortgage Lender?
A
mortgage lender (such as a bank, credit union, or direct mortgage company) is the financial institution that
actually provides the money for your home loan. They evaluate your financial profile, underwrite the loan, approve it, and ultimately issue the funds at closing.
Key points about mortgage lenders:
- Role: They lend the money directly to the borrower.
- Products: Can only offer their own loan programs and interest rates.
- Process: Handle the entire loan cycle in-house—including underwriting, processing, and closing.
- How to work with them: If you want to compare multiple loan options, you’ll need to reach out to several different lenders individually to see who offers the best rates and terms.
What Is a Mortgage Broker?
A
mortgage broker is an independent, licensed professional who
does not lend money directly. Instead, they act as a middleman between the borrower and multiple lenders. They gather your financial information once, shop different lenders on your behalf, and present you with the best loan options available.
Key points about mortgage brokers:
- Role: Serve as an intermediary to find and secure loans from various financial institutions.
- Products: Have access to a wide network of lenders and loan programs.
- Process: Help you choose a suitable loan, manage your application, communicate with lenders, and negotiate terms on your behalf.
- How to work with them: You hire a broker, and they handle the shopping, comparison, and much of the loan prep work for you. Brokers are typically compensated by either the borrower or the lender (but not both).
Key Differences at a Glance
| Feature |
Mortgage Lender |
Mortgage Broker |
| Role |
Directly provides the loan funds. |
Find loans from multiple lenders for you. |
| Loan Source |
Only offers its own mortgage products. |
Accesses a variety of lenders and programs. |
| Who They Work For |
The Financial institution. |
You, the borrower. |
| Payment |
Lender pays its employees; no broker fee. |
Broker earns a fee—from you or the lender. |
| Primary Function |
Underwrite, approve, and fund the loan. |
Connect you with a lender and manage the application process. |
