Mortgage Broker = Wholesale Rates
Bank/Credit Union = Retail
When you go to Wells Fargo, or Countrywide Etc. (Retail you don't have to pay Junk Fees= Loan Processing Fee and Administration Fee.
If you use a Mortgage Broker you would pay a Lender Fee to Wells Fargo, or Countrywide Etc. Plus the Junk Fees.
Obviously people wouldn't use a Mortage Broker if they had to pay more. Most Lenders give the Mortgage Brokers a Wholesale interest rate.
So if the lowest rate available at Par Pricing(Not Discounted) was 4.75% at Wells Fargo Retail, the Mortgage Broker may have a Wells Fargo Wholesale Rate of 4.625% to make up the difference of the $1000 Junk Fee.
The Interest Rate Matrixes are set up different for Retail Vs Wholesale. The Mortgage Broker also makes money by receiving a Yield Spread Premium for charging a higher rate then Par Pricing. This is also the case with Retail Lenders. If the lowest rate available without buying Points is 4.75%, and there are not adds to the rate for Fannie Mae and Freddie Mac Risk Factors, (Examples Higher LTV, FICO SCORES ETC.) and the Lender-Broker gives you a higher rate of 5.25%, they will get paid a rebate(Yield Spread Premium)
Whether you use a Retail Bank, or Mortgage Broker, you need ask your friends and family to refer you to a Loan Officer that is honest and doesn't take advantage by overcharging, or giving you a higher interest rate.
The advantage of a Mortgage Broker is that they use more then one bank, and can shop for the best deal and rate.
The advantage of Retail Banks is that most of them provide a interest rate break if you do EFT Mortgage Payments and sign up for Checking and Savings with them.
It is normal to pay a Lender Fee of $900.00. Most Lenders and Mortgage Brokers will charge 1 Point which Equals 1% of your loan amount. This is customary as they must feed their family. More then one point is greedy. DOn't confuse this point with Discount Points. Discount Points are when you pay a percentage to "Buy the Rate Down.
Example. The Current Rate is 4.75%, but you pay 1 point to lower your interest rate to 4.25%.
Also watch out for large Yield Spread Premiums. Zero Yield Spread Premium means that you got the best rate possible. In Conventional Loans a yield spread of up to .0375% is not uncommon when rates fluctuate. Over .05% you may want to ask questions. FHA loans sometimes have a higher YSP, yet you got the best rate, don't be alarmed if it is .05% A yield spread above 1% means you were overcharged.
Some Lenders and Brokers offer no cost loans by giving you a higher rate to make up the difference, or by charging a YSP. Remember nothing is free. They will argue that YSP. doesn't come out of your money. That is correct as the bank pays the Broker the rebate. YSP(Rebate) = Reward for Charging Higher Rate.
Hope this helps. If you need a trustworthy Mortgage Broker, or Lender I can help you out.