If you go with your existing Mortgage Company, they know you and know you are not shopping, so the price will be higher. You may have the right circumstances to buy a special type of mortgage, to save you money monthly (WHICH IS MOST IMPORTANT), so you should have a knowledgeable Broker and a bank that specializes in that type. Or your situation has changed or is better, so you want to study the market and shop.
Do not worry a lot about one time payments like settlement or closing costs, or other costs as they are only one time payments and you do not pay these monthly. I am not saying ignor other costs, DO NOT ACCEPT GARBAGE COSTS, but if you have a good broker, pay for his work. If you save any percentage on the rate, it translates to monthly savings for the mortgage term, usually 15 or 30 years.
There is always a bank who will want your business to increase theirs and will give you a slightly better rate or conditions, than the others. The TRICK is you have to find that Bank. So you go to a good, straight mortgage broker to shop the market for you and see what happens. If you feel the broker is not doing a good job, get another who WILL shop for you.
There are some companies, and not just the brokers, I would not touch with your pole. They lie about the way they do business, so they can lie about anything. Check Newspaper stories over the NET in the area of your house back for 2 years, when you have a short list of banks, so you make no mistakes.
You are right, rates are fixed by banks and some banks fix higher requirements than others. It is complicated and that is why Banks have Actuaries. But your credit score will help determine your rate (which if you think about it is sensible), the higher your score the lower the risk a bank faces in loaning you money. There is always someone who wants to do business and it does not cost you anything more than time, so look around. And there are companies who specialize in cleaning up your credit so your score is at it's highest. One such company I would recommend, who as far as I know is the cheapest of them all, is Ideal Credit Score at 718-502-8800.
54 years in business, self employed Mortgage Broker, BA, MBA.