Mortgage Lender Vs. Broker: Understanding The Differences

6 Min Read
Updated Dec. 12, 2023
Written By
Miranda Crace
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Choosing to take out a mortgage with help from a mortgage lender or a broker is a crucial step in the home-buying process, and it’s important to understand the differences between a lender and broker when making your decision. The key difference between a mortgage broker and lender is the work they do. A lender loans you money, while a broker helps you find and work with a lender.

Let’s take a deeper dive into the differences between mortgage lenders and brokers so you can determine the option that works best for your situation. 

Mortgage Lenders

A mortgage lender is a financial institution that loans you money to buy a home or refinance your existing mortgage. Large banks, local credit unions and online lenders like Quicken Loans® are all examples of mortgage lenders.

What To Expect When Working With A Direct Lender

Working directly with a lender gives you an opportunity to have a relationship with the organization that will loan you the money. When applying for a mortgage, you can contact the lender directly if you have questions, and the lender will reach out to you if you need to provide additional documentation. If the lender is the servicer for the loan, you’ll continue that relationship as you make your mortgage payments.

Pros And Cons Of Working With A Lender

Working directly with a lender during the home loan process has several benefits and drawbacks. Below are a few pros and cons to consider before taking on a mortgage with a lender:


  • You’re applying directly with the institution issuing your mortgage.
  • You won’t have to pay brokerage fees. Mortgage lenders charge an origination fee to get the loan set up.
  • You have more control in deciding which mortgage lenders to work with.


  • Your borrowing options may be limited if lenders only work with mortgage brokers.
  • Applying for a mortgage individually with each lender could take more time if you don’t have the right documentation in order.
  • Multiple credit inquiries could hurt your credit score if you don’t get approved by one lender and later apply with another.

See What You Qualify For

Mortgage Brokers

A mortgage broker is an independent financial professional who acts as a liaison between you and the mortgage lender. Unlike mortgage lenders, brokers don’t loan you money – they’ll connect you with lenders and assist by pulling your credit history, verifying your income and employment history, and using that information to apply for home loans on your behalf.

What To Expect When Working With A Mortgage Broker

From start to finish, brokers can walk you through the process of applying for a loan.

If you’re shopping around, it can take some time to apply with different lenders. A mortgage broker is likely more familiar with how different lenders handle mortgage applications and may be able to help speed the process up.

Once you’ve selected a lender, a broker can also act on your behalf to handle the back-and-forth conversations with the lender.

When it’s time to close on your loan, your broker will work with you, your lender and your real estate agent to make sure you close your loan smoothly and on time.

If you decide to work with a mortgage broker, it’s important to know you’re working with an experienced professional. Just like contractors, plumbers, attorneys or other independent businesses, there are knowledgeable brokers who will work hard for you. In their case, they’ll get you the best loan possible. Be sure to do your research and talk to friends and family for recommendations on brokers to work with.

Pros And Cons Of Working With A Broker

Taking out a mortgage with help from a broker also comes with its benefits and drawbacks. Below are some of the most common pros and cons of working with a broker:


  • Borrowers have access to multiple mortgage lenders and can easily and conveniently compare loan options.
  • You’ll have a good sense about how you’ll qualify with different lenders.
  • A broker can help you gather and organize any necessary documentation to prepare for a mortgage application.


  • Some lenders don’t work with mortgage brokers, so you could be missing out on potential mortgage lenders.
  • Borrowers are responsible for paying brokerage fees.
  • Brokers can be paid by lenders, so they may direct you toward lenders that don’t offer the best loan terms but pay brokers higher fees.

How To Choose Between A Mortgage Lender And Broker

Deciding between a lender and a broker comes down to your personal situation and goals in approaching the home loan process.

A lender may be a better option if you want to be in charge of comparing lenders and mortgage interest rates. If you have an existing relationship with a financial institution (like a bank, credit union or private lender), choosing to work with a direct lender may be the best option for you.

If you’re looking for a more simplified mortgage application process, working with a broker may be the better choice. Mortgage brokers do most of the heavy lifting when comparing options and finding the right lender for your needs.

Mortgage Broker Vs. Lender FAQs

Still have questions about the differences between mortgage lenders and brokers? Review a few frequently asked questions below:

How do I find a mortgage lender?

Finding the best mortgage lender comes down to doing your research. Reading online reviews and speaking directly with lenders can be incredibly helpful when making a decision. Comparing the annual percentage rate (APR) that lenders quote you is also important. The lower the APR, the less money you’ll spend on costs and interest over the course of the loan term.

How do I find a mortgage broker?

Similar to finding a lender, it helps to do your research when seeking the right mortgage broker for your personal and financial situation. Searching online, reading reviews and asking your real estate agent, friends and family are great methods for connecting with local brokers.

Can I work with a broker and a lender at the same time?

It’s possible to hire a mortgage broker while also doing lender research on the side. However, it may be unnecessary to do both – a broker’s job is to compare mortgage lenders so you don’t have to. If you want more control over comparing lenders and interest rates, hiring a mortgage broker may not be necessary.

The Bottom Line: A Mortgage Broker Or Lender Could Be Right For You

You don’t have to consult only with a broker or lender. Shop around and have conversations with both brokers and lenders to see who can offer you the best deal. Exploring your options will ensure you’re set up for financial success with your new home.

Once you’ve decided between a lender and a broker, you’re one step closer to securing a mortgage and achieving homeownership. Looking for further insights about different mortgage options? Learn more about the types of home loans to determine which is the best fit for your situation.

Take the first step toward buying a house.

See what you qualify for.


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