But I still don’t understand how can a broker possibly give a better rate than a bank? Can’t I just walk into the same bank and get the same loan without paying any YSP?
Basically they can’t. But an ethical mortgage broker has better access to bank rates and can do a quicker job of comparing/shopping. If you don’t have the time to do the leg work/chasing down banks, a mortgage broker is a good alternative. Be aware, not all mortgage brokers are ethical. The YSP or Yield Spread Premium goes to the broker and creates a conflict of interest with respect to getting a mortgage. The broker in effect works for the bank, not you.. If using a mortgage broker, make sure that they are not the only one trying to find you a loan (do a first/best one wins).