Direct Lenders vs. Mortgage Brokers: Which One Is for You?
Whether you’re in the market for a business loan or a new home, one of the first steps you must take is to review your finances and get pre-approved for a loan. For many people, this is the stressful part of the process, so much so that people often overlook the extremely important aspect of figuring out where exactly to get the loan.
When it comes to this, you have two options: a mortgage broker and a direct money lender. There are several differences between the two, and the idiosyncrasies of mortgage brokers and direct lenders can be varied and numerous. So, to help you navigate through this difficult step,
below is some information to help you through this process with less stress and more monetary gains.
Direct Lenders
Put simply, a direct lender is a financial institution that has the legal authority to offer a mortgage. If you choose to find a mortgage going through direct lenders instead of mortgage brokers, you have to apply individually to each lender. While this may seem like a tedious process to some, given that there can be little variation between rates and terms, it’s certainly not to be discredited due to the due diligence it requires of the individual. Even a difference of 1% can make a huge difference in the life of your loan, and for many people that justifies the extra time commitment which often accompanies direct lending.
Mortgage Brokers
The primary benefit of a mortgage broker is variety. Brokers allow the ability of comparison-shopping: the broker can acquire a lot of quotes from different lenders at once and present them to you. Instead of applying to each direct lender separately, you can apply to different ones all at once. Ostensibly, this may seem like the more cost efficient idea, but let’s take a deeper look.
Why People are Favoring Direct Lenders
While a mortgage broker can highlight the different options from various lenders all at once, they may end up spinning the one that offers them the best chance at the biggest commission check. Direct lenders often don’t receive commission based on what plan you choose, so you have a much better chance at receiving the best loan option and rate for you.
Also, going to a direct lender cuts out the middleman. The direct lender is the source of your loan, so finding a lender that understands your specific needs and can serve as a point of ongoing contact can be extremely valuable for many people.
Originally published at gocapfinancialwest.com on March 28, 2018.
