Why Mortgage Broker rates are lower than banks and big lenders

Why are they lower?

A well connected and well priced mortgage broker-especially a small one who

owns their own loan company-will have much lower overhead than larger lenders and banks.  To simplify what this means to you--- a lender with high overhead must "markup" the wholesale cost of loan funds to turn a profit--a much larger markup than a lender with low overhead, like the small mortgage broker cited here.  And here is the fact most people don't know.....

The big secret is all lenders, big and small, get money from the same secondary market at similar wholesale prices.  A larger high volume bank or big lender might get a tiny bit better pricing than a broker, but their huge overhead will eat that slight advantage up and more.  Bigger the lender, the larger the overhead. 

Think Rocket Mortgage, New Day or Loan Depot.  Their names are EVERYWHERE -- big sporting event sponsorship, TV ads, and they pay to magically appear online and follow you around in a creepy stalker like fashion!! They pay millions and in some cases billions of dollars a year in marketing costs, not to mention the gigantic cost of corporate overhead and management.  For every loan officer they employ, these large lenders have matching numbers of people in support at the corporate level, which means every loan's markup has to pay not only the loan officer, but all those corporate peeps and gigantic executive salaries!  And it's even worse at banks! These exec's making millions a year do so on your back-via higher rates you pay them!

A mortgage broker will typically be anywhere from a quarter to half percent better on the rate than these big lenders and banks.  And if matching the rate offered by banks and big lenders, a mortgage broker will typically have as much as $5k or more less in lender fees!

Why this is so confusing to the average person -- rates can change drastically day by day, sometimes even hour by hour making it nearly impossible to compare rates from one lender to another. More on that by clicking on the image.

And your individual qualifying criteria can affect the rate as well, something no lender truly knows until they have a loan app from you with accurate details about your transaction!  More on that can be found here: