Retail vs Wholesale
Applying with a direct lender will gain you access to the retail channel of mortgages, while the only way to access the wholesale channel is through a mortgage broker.
The mortgage industry is full of companies helping people get access to home financing. These entities include mortgage brokers and direct lenders. While they may provide services for people seeking mortgage loans, they are very different.
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Direct lenders are banks, credit unions, or mortgage financial institutions specializing in lending. Each has their own set of criteria to meet to qualify for a loan.
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Mortgage brokers have relationships with wholesale lenders, who offer discounted rates that are not available directly to the public. They work on the homebuyers behalf and shop multiple wholesale lenders.
Average $9,407 in Savings!
On average in 2021, homebuyers spend $9,407 more on a mortgage by working with a direct lender instead of a mortgage broker.
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2021 Nationwide data taken from the top direct lenders vs the top 10 wholesale lenders.
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Homebuyers saved $1,460 in upfront costs and $7,947 in interest.
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The average savings was $8,375 in 2020, $9,745 in 2019, and $5,654 in 2018.
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Data filters: conforming loan limit, conventional loan type, 30 year fixed rate, 41%-45% debt-to-income ratio.
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According to HMDA public data 2018-2021
Minorities Saved an Average $10,424
On average in 2021, minorities spend $10,424 more on a mortgage by working with a direct lender instead of a mortgage broker.
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2021 Nationwide data taken from the top direct lenders vs the top 10 wholesale lenders.
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Homebuyers saved $1,373 in upfront costs and $9,051 in interest.
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The average savings was $8,271 in 2020, $12,707 in 2019, and $8,175 in 2018.
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Data filters: conforming loan limit, conventional loan type, 30 year fixed rate, 41%-45% debt-to-income ratio.
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According to HMDA public data 2018-2021
Direct Lenders
Any bank, credit union, or financial institution that isn't a mortgage broker is a direct lender.
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Interest rate and loan costs are higher
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Collects compensation from the borrower in the loan
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Can only offer their own loan programs & products
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Much more layers of management
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High operation costs
Mortgage Broker
Hawaii Mortgage Experts is Hawaii's largest mortgage broker
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Closed over 3 billions in volume
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Doesn't charge any borrower fees
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Compensation is paid by wholesale lender outside of loan
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Evaluates many wholesale lenders to offer best solution
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License in other states
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No layers of management
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Much less operation costs
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