It is the Mortgage Brokers job to find you the best loan. Most likely, they do not lend money themselves. A good broker will have expertise in finding the right loan at the best price for you, explain all of your options, and will assist you through the entire setup process until the money is in your hands.
Mortgage Brokers are in the business of selling mortgages. The interest rate that you get and the points you have to pay should be the same as if you went directly to the lender for the loan. As a matter of fact, the rates and fees should be lower, since retail lenders incorporate overhead charges within their loans. The impact will be higher rates and higher fees to compensate for the overhead (cost to originate).
This will not be the case if the broker engages in “price and fee gouging” and passes this cost on to you. It is important to thoroughly review any paperwork before you sign. The commission that the broker receives from the lender is negotiable, but is not a fee to you. On a large loan it will be several thousand dollars. You should never hesitate to ask the broker what the normal fees would be. It may be possible for the broker locate lower appraisal, title and other miscellaneous fees, depending on the area in which you live.
When choosing a mortgage broker you should check the following:
How many lenders/underwriters does the broker do business with? A broker should do business with a wide array of lenders/underwriters offering the most competitive pricing and programs. Also, your broker should be experienced in all avenues of the business, i.e. subprime, conforming and A- credit. If your broker only knows one avenue, that is the avenue you will get, which could lead to higher pricing, more fees, higher payments, less money or a simple denial.