Are You Really Working With a Mortgage Broker? Here’s How to Tell

These days, a lot of lenders throw around the term “mortgage broker.” It sounds friendly and independent — like someone shopping the market for the best fit on your behalf. But here’s the truth: many companies calling themselves “brokers” aren’t brokers at all.

Let’s break it down.

What a True Mortgage Broker Does

A real mortgage broker works independently. They partner with multiple lenders, giving you access to a wide range of loan options, pricing structures, and underwriting guidelines. Their job is to shop around for you — not sell you a single company’s product.

Think of a mortgage broker like your personal shopper. They compare rates and programs across several banks, credit unions, and wholesale lenders to find what best fits your situation.

What a Direct Lender Does

Now, some companies advertise as brokers but actually fund the loan themselves. These are direct lenders — they underwrite, approve, and fund loans in their own name.That’s not necessarily a bad thing, but it means they’re limited to their own products. They don’t shop other banks, and their loan officers are often required to sell only what that company offers.

So, if a “broker” tells you they have “the best rates in the market,” but they only work for one company — that’s a red flag.

Why It Matters

The distinction matters because it impacts your options:

• A broker can compare multiple lenders to find the best fit.

• A direct lender can only offer you what they have on their shelf.

Knowing the difference ensures you’re getting real choice, not just marketing language.

How to Spot the Difference

Here are a few quick ways to find out who you’re really working with:

1. Ask who funds the loan. If it’s their company’s name on the closing documents, they’re a lender.

2. Check if they can send your file to more than one lender. Brokers can — direct lenders can’t.

3. Look up their license. True brokers hold a Broker License, not just a Lender License.

Bottom line:Before you apply, ask the simple question — “Are you a mortgage broker or a direct lender?”The answer determines whether they’re working for you or for their company.