Mortgage Brokers vs. Direct Lenders
Buying property for the first time can be intimidating and scary. It’s a life changing event and it shouldn’t be stressful or give you a headache. One of the important things to know is the difference between mortgage brokers and direct lenders.
Aside from the licensing, the mortgage rates and the guidelines for purchasing property, mortgage brokers have access to multiple lending sources. This allows the broker to get the best overall deal for you and for them. Since they work on commission, the less you have to pay interest on the loan can sometimes get the broker a better commission.
When you deal with direct lenders you are dealing with one financial option. A direct lender doesn’t have the same financial resources as a mortgage broker because the broker acts as a liaison between the borrowers and the companies lending the money. Mortgage brokers may not be as fast as you like when it comes to closing the deal because there are more parties involved in getting you what you want. Direct lenders have a shorter turn around. But what is important is knowing you have to look for the right lender as much as you have to look for the right broker.
Both lenders and brokers have similar business practices, but each takes different approaches to achieve the same outcome: getting you that property. Direct lender fees associated with the transaction may be less than mortgage broker fees because brokers charge more to compensate for absorbing the lender fees that are included in the same transaction. While brokers and lenders want your business, ultimately, it is you that needs to decide who you do business with.
You can look at a mortgage broker as a middleman for your transaction. A direct lender works directly with the bank you are, at the end of the day, doing business with for your property needs. This means they have the bank’s best interests in mind and not necessarily yours. However, the same goes for the mortgage broker. They make money based on the commission for the sales transaction. There are plenty of ways to increase their commission by not disclosing fine details of the transaction. The right mortgage broker isn’t afraid to answer questions about what fees are charged and how those fees are calculated.view more details straight from the source.
It ca intimidating and scary, sure, but it might be what you want and getting it through a financial institution is likely how you’ll get it. Knowing the difference between a mortgage broker and a direct lender can make a difference in how much you spend getting the best deal.