What is the difference between a mortgage broker and a direct lender?

A mortgage broker is an intermediary who shops your loan application to multiple lenders and earns a commission when a loan closes. They offer access to a wide range of loan products and can find competitive rates, but you pay their fee (often built into the rate). A direct lender — such as a bank, credit union, or mortgage company — originates loans using their own funds and funds the loan themselves. Direct lenders may offer fewer options but faster processing and direct communication. Working with a broker gives you more choices; working directly with a lender can streamline the process.