Do I save more with a mortgage broker or a direct lender?

A mortgage broker can shop through their wholesale network a variety of lenders so usually a broker is much better.

You are not paying the direct lender price plus a broker fee.

It depends. If you go to a boutique lender with all sorts of trimmings, you’re going to get screwed. If you shop around for medium-sized lenders that have been around long enough to be credible, and find the cheapest rate -- then you’re saving money. Mortgage brokers are just shopping the different banks and then tacking on a fee for their services and your time. Some banks will even give you a rate comparison of other competing banks which can save you some legwork.

disclosure - we are a direct lender so of course we feel we can offer the better "deal". We also "shop" lenders as do brokers but we do more of the work with our people and our money than a broker. life has been made a bit more difficult for brokers with new regulations and fewer wholesale options so you might have a smoother ride with a direct lender - Also, total originations by brokers in the US has dropped from a high of around 65% a few years back to I heard 3rd q 09 was about 25% - but doesnt mean you wont have a good experience with a broker - good luck.

The brokers that are left are fantastic ones that have been tested, background checked, fingerprinted and educated. Brokers are the best route!

the ones left probably are good - agree on that one - but, direct lenders' loan officers do go through the same steps you mention before they can originate a loan... I think testing etc.. is not a requirement for banks although most have internal quality control in their hiring/training etc..

Contrary to some of the other answers here I have found, consistently, that I get better rates and terms (fees, etc.) either from a broker or a smaller direct lender who plans to immediate sell the loan at closing to a larger bank. I usually know before I close which major institution will have my loan and I often got quotes directly from them but at much worse rates and terms. They sometimes are banks I do major business with and have accounts with and it makes no difference. I know some people who work at these major banks and I've asked them why they can't offer anywhere close to competitive rates compared to the smaller shops that just end up selling them the loans anyway and you can tell it frustrates them but it boils down to the overhead they assign internally for the loans. The small shops work on a much smaller margin with smaller overhead and are much more willing to negotiate and eats fees and offer rate reductions as well. Silly but true. As a recent example, I just got quoted yesterday to re-finance my mortgage with CitiMorgtage who holds my current one. I have excellent credit and a perfect record with them -- so much so that they proactively reduced the rate on my 5/1 ARM and reset the 5 year timetable last year without my asking just to try and keep me happy before I shopped around. Yet the rate they quoted me was a full 0.5% higher with $1,500 in extra fees and two weeks extra to close versus going to a small shop that planned to sell the loan at closing to, you guessed it, CitiMortgage.

Bottom line is competitively shop. I usually carpet bomb LendingTree, Bankrate and a few other sites then get inundated with emails and calls and play the people off against each other. Then I usually have several willing to match the best terms and I go with whichever one I got the best vibe from among the equals.

I can honestly say that it should not make a difference on the transaction itself. You go with the person/company that was recommended to you because of their service and attention. Don't focuse on the 'BEST' deal always because that doesn't mean best service.

It may all appear the same, and you will certainly get a mortgage, but the process can either be stressful or smooth sailing depending on who you decide to work with.

There are pros and cons for working with a banker and pros and cons with working with a broker. Bottom line, go with a great deal and with someone you feel you can trust. Check them out on the internet. Ask for references.

Good luck!