Mortgage broker vs. bank vs. credit union: which should you use?

Written by Samantha SheltonNMLS 1647301Updated October 2026

A couple at a kitchen table comparing three printed loan documents side by side, with a tree-lined autumn street in the window behind them

Use the one that lets you compare. A bank, a credit union and an online lender can each offer only their own loans. A mortgage broker takes one application to multiple wholesale lenders. A 2024 analysis of federal data found broker buyers paid less upfront than buyers at nonbank retail lenders. Whichever you choose, compare at least two Loan Estimates.

Most people choose a mortgage the way they choose a gas station: the closest one, or the one they already use. The federal data says that habit costs money. This guide compares the four places to get a mortgage on what changes your cost and your experience: lender access, who pays the loan officer, who handles your file, the program menu and Michigan’s own programs.

If the vocabulary is new, start with how mortgages work. If you already have quotes, our guide to comparing mortgage lenders shows you how to read them.

Key takeaways:

Only a broker compares by design: One application with a broker reaches multiple wholesale lenders. A bank, a credit union or an online lender can offer only its own loans.
Every loan officer is paid by someone: Banks, credit unions and online lenders pay theirs out of loan pricing. A broker is paid by the lender or by you, never both, and federal rules do not let that pay rise with your rate or fees.
The evidence favors brokers on purchase loans: Broker buyers paid about $10,662 less over the life of a $400,000 loan than buyers at nonbank retail lenders, in a 2024 Polygon Research analysis of federal mortgage data.
Most buyers apply in one place: Among 2023 home buyers, 66% applied with only one lender or broker, a federal survey found.
Local is a service question, not a lender type: A local broker gives you the comparison and a person who knows Michigan.

What is the difference between a broker, a bank, a credit union and an online lender?

All four can get you a mortgage. The difference is how many choices sit behind the person you talk to.

Retail bank: Lends in its own name under its own guidelines. Your loan officer is a bank employee, the bank underwrites the file, and the bank decides which programs it offers at all. The appeal is one relationship for checking, savings and the mortgage.
Credit union: A member-owned, not-for-profit cooperative. You must be eligible to join, usually through where you live or work, a family member or a group you belong to. It offers only its own programs. Some credit unions keep their mortgages and collect the payments themselves; others sell them.
Online direct lender: A mortgage company that lends in its own name and takes applications online or by phone, often in many states. The convenience is real, but the menu is still one company’s menu.
Mortgage broker: A licensed company that does not lend its own money. It matches your file to a wholesale lender whose rules and pricing fit it and manages the loan to closing. The wholesale lender underwrites and funds it. A mortgage broker is not a real estate broker, who works on the home sale itself.

Align Lending is a mortgage broker: one application, multiple wholesale lenders, and Samantha Shelton handling the file herself.

How do they compare side by side?

The broker column describes Align specifically, because brokers are not all built the same way.

Question	Mortgage broker (Align)	Retail bank	Credit union	Online direct lender
Lenders you can reach	Multiple wholesale lenders, one application	One: the bank	One: the credit union, if you can join	One: the company
Who pays the loan officer	The lender, not a fee you pay Align	The bank, out of its loan pricing	The credit union, out of its loan pricing	The company, out of its loan pricing
Who handles your file	Samantha, first conversation to closing table, with a processor	A loan officer, then processing and underwriting teams	Varies; ask who your contact is after you apply	Often a team; ask whether one person stays on it
Who underwrites the loan	The wholesale lender your file is placed with	The bank	The credit union	The company
Program range	Conventional, FHA, VA, USDA, jumbo, non-QM, bank statement, DSCR, renovation, HELOCs and more	Only what that bank chooses to offer	Only what that credit union offers	Only that company’s programs
Michigan programs (MSHDA)	Places MSHDA loans, including down payment assistance	Only if it is a participating lender	Only if it participates	Only if it participates
If an underwriter says no	Samantha can take your file to a lender whose rules fit it	Usually you start over elsewhere	Usually you start over elsewhere	Usually you start over elsewhere

The last row matters more than people expect. Lenders layer their own requirements, called overlays, onto each program’s minimums. When one lender’s overlay says no, a bank has nowhere else to send your file. A broker does.

How does a mortgage broker get paid, and does it cost you more?

Every loan officer is paid by someone. A bank, credit union or online lender pays its loan officers and covers that cost through its loan pricing. It does not list that pay as a separate charge. A broker is paid one of two ways on a loan, never both:

Lender-paid: The wholesale lender pays the broker. This is how Align is paid. You do not pay Align a fee.
Borrower-paid: You pay the broker directly, and the charge appears in the origination charges on your Loan Estimate.

The rule that matters is 12 CFR 1026.36. It bars any loan originator, broker or bank employee alike, from being paid more because your interest rate, fees or other terms are higher. It prohibits steering you to a loan just because it pays the broker more. It also gives brokers a safe harbor when they show you options from at least three lenders they regularly work with. Those options must include the loan with the smallest rate and the loan with the smallest total in points and fees. They must also include the loan with the smallest rate that has no risky features, such as a prepayment penalty or a balloon payment.

Qualified Mortgage rules add a ceiling on total points and fees, including what a broker is paid. For most loan sizes that cap is 3% of the total loan amount, and smaller loans have higher caps.

So does a broker cost you more? Not by itself. When the lender pays the broker, as it does at Align, that pay comes out of the lender’s pricing. A bank covers its loan officers’ pay the same way. It is not an extra fee added to your loan. The real question is what the whole loan costs you. The Loan Estimate shows that, including the annual percentage rate that folds those costs into one number.

Do borrowers who use a mortgage broker pay less?

On purchase loans, the federal data says they did. A 2024 Polygon Research study used 2023 Home Mortgage Disclosure Act data on 30-year fixed purchase loans. It compared loans made through brokers with loans from nonbank retail lenders, meaning mortgage companies that are not banks and lend to you directly.

Broker buyers paid 1.15% of the amount they borrowed in upfront costs.
Buyers at nonbank retail lenders paid 1.48%.
Average interest rates in the two groups were about the same.

The study also estimated the difference over the life of the loan: broker borrowers paid about $10,662 less over the life of a $400,000 loan held 30 years than borrowers at nonbank retail lenders. On VA purchase loans, veterans who used a broker paid about $13,432 less over the life of a $400,000 loan than veterans at nonbank retail lenders.

The study was commissioned by a wholesale mortgage lender and an advisory firm, both named in the sources below, and you can read the full Polygon Research study yourself. It reports averages on purchase loans, so the way to know for your own loan is to put two Loan Estimates side by side.

Why does comparing lenders matter so much?

Because the same borrower can get different prices from different lenders on the same day. Freddie Mac found that in October and November 2022, borrowers who got two quotes could have saved as much as $600 a year. Those who got four or more could have saved more than $1,200 a year.

Yet most people apply in one place. The National Survey of Mortgage Originations, run by FHFA and the CFPB, asked 2023 borrowers how they shopped. Among home buyers, 42% seriously considered only one lender or broker, and 66% applied with only one. Homeowners who refinanced shopped even less. Their figures were 55% and 77%.

Shopping on your own means separate applications and phone calls. With a broker, the comparison is part of the one application.

Is a local mortgage lender better than an online lender?

A local lender is not cheaper by default. Local and online describe how you are served, not what kind of lender you use: a bank can take applications online, and a broker can be the person down the road.

In Michigan, local knowledge is worth a lot, because property taxes depend on the exact city or township and reset after a sale. Samantha puts it plainly: “I wouldn’t tell somebody, ‘You’re in Oakland County, so here’s what your taxes are.’ It doesn’t work like that. We need the actual property.”

Online lenders sell convenience, and some keep one loan officer on your file. Others route you through teams. Before you apply anywhere, ask who answers when you call after you apply. At Align, the answer is Samantha, and you can sit across a desk from her in Waterford, in Oakland County. Local real estate agents bring Samantha in for a second opinion when a buyer arrives preapproved elsewhere. She regularly finds a lower rate or less cash to close, whichever helps the buyer more. A local broker gives you both the comparison and a person who knows the township you are buying in.

When does each option make sense?

Each channel has a reason people pick it, and a comparison worth getting first.

Your bank: You value one relationship. Some banks offer customers a pricing discount. Get a broker’s Loan Estimate anyway, so the discount has something to be measured against.
Your credit union: You are a member and like a cooperative. Ask whether it offers your program and participates in MSHDA, then compare its Loan Estimate with a broker’s.
An online lender: You want to apply at 11 at night. Ask who handles your file after that, and compare the same way.
A mortgage broker: You want the comparison done for you by someone who knows each lender’s rules.

Where a broker’s reach matters most

Self-employed income: Fannie Mae generally asks for two years of personal and business tax returns, and lenders read them differently. Some offer bank statement loans instead. Samantha calls self-employment different, not harder. See non-QM loans for self-employed borrowers.
A recent credit event: A file one lender declines can fit another lender’s guidelines under the same program.
A non-warrantable condo: A project with an active lawsuit or many investor-owned units can be turned away by one lender and financed by another. See condominium financing.
A jumbo loan: Above the 2026 conforming limit of $832,750, each lender writes its own jumbo rules. See how to qualify for a jumbo loan.
A tight timeline: Over the last 12 months, Samantha’s loans averaged under 14 days from application to clear to close, across more than 100 loans. Your purchase agreement sets the closing date; her job is to have the loan ready well before it. Clear to close is not the same as closing.

What should you ask before you choose?

These questions work with any bank, credit union, online lender or broker.

What is your NMLS number? Look up the company and the loan officer on NMLS Consumer Access before you send documents.
How are you paid on my loan? Lender-paid or borrower-paid.
Which programs can you reach for a file like mine? Listen for program names, not a vague promise of many lenders.
Who handles my file after I apply, and what happens if your underwriter says no?

What Michigan buyers should know

MSHDA programs need a participating lender: The MI Home Loan and the MI 10K DPA are available only through participating lenders. The MI 10K DPA is an interest-free deferred loan of up to $10,000 toward down payment and closing costs, with a 640 minimum credit score. The MI Home Loan sales price limit is $566,355 statewide as of June 1, 2026. Align places MSHDA loans, including down payment assistance. See state mortgage assistance programs.
Your taxes are not the seller’s taxes: The year after a Michigan home sells, its taxable value resets to half of the assessor’s market value, so the seller’s tax bill is not your tax bill. The Michigan Property Tax Uncapping Study shows how large that reset runs by county.
Loan limits are the same statewide: Every Michigan county shares the 2026 limits of $832,750 for a conforming loan and $541,287 for FHA.

Align Lending is licensed in Michigan, Ohio, North Carolina, Florida, Louisiana and Texas.

How Align works, and how we are paid

Align is a mortgage broker. One application goes to multiple wholesale lenders, and Samantha matches your file to the loan that fits. Align is paid by the lender, not by a fee you pay us, and federal rules bar a broker's pay from changing with your rate or fees.

Most people never compare. In a federal survey of 2023 home buyers, 66% applied with only one lender or broker. A 2024 Polygon Research analysis of federal mortgage data found broker borrowers paid about $10,662 less over the life of a $400,000 loan than borrowers at nonbank retail lenders.

Sources: Regulation Z, 12 CFR 1026.36(d); FHFA and CFPB, National Survey of Mortgage Originations, loans made in 2023; Polygon Research, Loan Costs Channel Study 2024 (2023 federal HMDA data, 30-year fixed purchase loans; commissioned by United Wholesale Mortgage and Willow Canyon Advisors).

FAQ: Mortgage broker vs. bank vs. credit union

Short answers to the questions people ask most about where to get a mortgage.

Is a mortgage broker cheaper than a bank or credit union?

It can be, and the way to know on your loan is to compare. A bank or credit union can only offer its own loans, while a broker can set that offer against multiple wholesale lenders on the same day. The 2024 Polygon Research analysis compared brokers with nonbank retail lenders, not with banks or credit unions. It found broker buyers paid about $10,662 less over the life of a $400,000 purchase loan. Bring your bank’s or credit union’s Loan Estimate to Samantha and see the two side by side.

How do mortgage brokers get paid?

By the lender or by you, never both on the same loan. Align is paid by the lender. Federal rules do not let a loan originator’s pay rise with your interest rate or fees, and that covers bank and credit union loan officers too.

Will a broker steer me to whichever lender pays them more?

Federal rules prohibit steering you to a loan only because it pays the broker more. Ask to see your options side by side, with the same loan amount and lock period in each column.

What does a local loan officer know that an online one may not?

Local is about service, not price. A local loan officer knows Michigan details like tax uncapping and township lines, and you can reach them. A local broker also brings the comparison across multiple lenders.

Can a mortgage broker help if my credit is not perfect?

Often. Lenders set different requirements beyond each program’s minimums, so a file one lender declines may fit another. Samantha’s first question is usually “Who told you that?”, because people often rule themselves out before anyone has looked.

How do I check that a mortgage broker is licensed?

Search the company and the loan officer on NMLS Consumer Access. The record shows license status, authorized states and any regulatory actions. Align Lending is NMLS #2041154, and Samantha Shelton is NMLS #1647301.

The bottom line on choosing a broker, bank or credit union

A bank, a credit union and an online lender each sell one menu. A broker shops the menu for you. On purchase loans, federal data shows broker buyers paying less upfront than buyers at nonbank retail lenders.

If you want that comparison done by someone who lives here and stays on your loan, that is what Align Lending is built for. Samantha takes one application to multiple wholesale lenders and is paid by the lender. She handles your file herself from the first conversation to the closing table. Already have an offer from one of the big national lenders you see advertised? Bring us the Loan Estimate. We will compare it line by line and show you where we can do better. Call 248-506-5727.

Sources: Loan originator compensation and anti-steering rules, 12 CFR 1026.36(d) and (e); Qualified Mortgage points and fees limits, 12 CFR 1026.43(e)(3). Polygon Research, Loan Costs Channel Study 2024, 2023 HMDA data, 30-year fixed purchase loans, commissioned by United Wholesale Mortgage and Willow Canyon Advisors. Freddie Mac Research, February 2023. FHFA and CFPB National Survey of Mortgage Originations, 2023 loans. 2026 loan limits, FHFA and HUD; MSHDA program terms, Michigan State Housing Development Authority. Fannie Mae Selling Guide B3-3.2-01. Clear-to-close average, Align Lending loan records.

This article is for informational purposes only and is not intended to provide legal, financial, or tax advice. Rates, fees, and loan programs vary by lender, borrower, and market conditions; confirm your actual numbers on your Loan Estimate and consult a qualified professional about your situation. Research figures are averages, are not a rate quote or an offer of credit, and are subject to change. Align Lending is not acting on behalf of or at the direction of HUD, FHA, the VA or any government agency. Align Lending is an independent Michigan mortgage broker, NMLS #2041154.