Are all loans more expensive when using a broker?

[James McGovern]

Are all loans more expensive when using a broker especially hard money? Are there any scenarios where a broker can make a loan cheaper than going directly to the lender?

[Patrick Roberts]

As with everything in life, it depends. In some cases, yes, the broker fee is laid on top of whatever the lender makes. In other cases, a broker can help negotiate lower costs and possibly save money. It varies by lender and particularly by loan product.

Something I saw firsthand working as an underwriter at a direct lender is that not having a broker doesnt automatically remove their fee and result in lower total cost. What frequently happens is the lender adds what wouldve been the broker's fee to their own margin and simply makes more on the loan. The market will bear what the market will bear - if the going rate for something is X, then that is what everyone charges. How that money is divvied up on the backend is typically what varies. 

If you have a house that will sell for $300k, and then you find a way to cut the listing agent's commission/fee out by not using an agent, are you then going to reduce the price of the house by the same amount as the saved commission, just so you can do all the extra work for free? If the house will still sell for $300k, then you just make more and do more of the work yourself. The market will bear what the market will bear.