Example:

Going directly to a bank for a mortgage loan makes the most sense when you already have an extremely strong relationship with a financial institution. Banks have latitude to offer you exclusive deals if they want, and if you already have various deposit or loan accounts with a bank, it will sometimes offer you incentives that it would not otherwise give to someone coming in for the first time. Discounts on closing costs, or even more favorable interest rates, aren't unheard of, especially for premium customers with extensive banking relationships.

Banks can also be helpful when you require a loan that does not conform to the major secondary markets for mortgages. So-called jumbo loans involve amounts higher than the limits for reselling mortgages to government-sponsored enterprises Fannie Mae or Freddie Mac, and so banks typically must keep those loans on their own books. The risk involved makes it even more important for the bank to feel comfortable in dealing with you personally, adding value to an existing relationship.

However, banks are not always the best source for mortgages. Loan officers will know what their bank has to offer, but they are not always as knowledgeable about programs in which their institution does not participate in.  Also, your bank may not have the best terms available in the market, and so you could end up paying more for your mortgage than you would with another lender with which you are familiar with.

Mortgage brokers are independent intermediaries that help shop for mortgage loans on your behalf. They have knowledge about loans from several financial institutions, and they will also be aware of the full range of special loan programs available to various borrowers. The biggest benefit of a Mortgage Broker is that you can get a loan from whichever source is best, which is something you could only do by going directly to various banks and asking questions yourself.

Brokers are also able to obtain better loan terms on your behalf. You won't necessarily get better interest rates or other terms than you would on your own, but the experience that your broker has could make the process easier than if you had to do it yourself.

Finally, mortgage brokers can see possible red flags in your financial history and take steps to deal with them proactively. That can be a significant improvement over facing these problems in the middle of the application process with a large bank, which can bring the whole enterprise to a crashing halt at the most inconvenient time possible.

However, Mortgage Brokers are not a perfect solution to the problem of getting the best mortgage you can. Some lenders won't work with brokers, instead insisting on direct relationships with borrowers. In some cases, that means that working with a broker may close the door to a bank that may have given you the absolute best possible rate.