What is the difference between a direct lender and a mortgage broker?

Direct Lenders work directly with borrowers and fund loans in their own names. Mortgage brokers take applications, collect supporting documentation and then submit the information to a lender to fund the loan. Mortgage brokers traditionally charge a 1% commission for their services. This may be collected from the borrower in the form of an origination fee or from the lender who passes the cost on to the borrower in the form of a higher interest rate.

How should I compare rates offered by different lenders?

When comparing lenders, it is important to compare total costs for the same interest rate and lock period. Because rates change daily, it is important that you compare all lenders you are considering on the same day. It is also important that you ask whether the loan has a prepayment penalty.