A lender has the marketing/advertising cost already priced into the loan when you work with them retail. That same lender can offer to the broker the same program at a reduced cost, as it will not require the marketing dollars and cost that would normally be associated with doing the loan retail.

Lenders have a wholesale rate and a retail rate. Brokers have access to the lender's wholesale rates. Brokers make their money then in one or both of two ways. First, they can offer the lower rates to borrowers and charge fees, such as origination fees. Second, they can offer rates slightly higher than wholesale and get rebates from the lender.

Because a broker can shop around among many different lender's rates, they can usually find a better rate for a consumer than a consumer would be able to find on their own going through a local lender and getting their retail rates. Consult with your mortgage broker to find out what your best rate options are.

 

 ++