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.
Whether you’re a first-time borrower or a confident real estate enthusiast, it’s important that you are choosing a mortgage broker that will get you the best deal, and not just out to close another deal for themselves. Since a mortgage broker is a business focused on make money when you get what you need in real estate, they have certain requirements. They don’t have the same financial backing as large financial institutions. If they broker the right deal for you, they are looking to get you the lowest interest rate available.
Large financial institutes are in the real estate business for one thing: to make money. That means you may get the deal you think is right, you will get that property you always wanted. But you may be saddled with a mortgage that was outside your original price range. And you will pay the mortgage rate, but possibly a higher interest rate because you signed too quickly on your dream property. A mortgage broker doesn’t want you to spend more money on a high-interest rate, they won’t see any financial success if you give your income to big banks. Interest rates are another form of payment, whether fixed or variable, that make you spend more money and give it all to the bank.
Large financial institutions have loan officers that do exactly the same as a mortgage broker. The big difference between a loan officer and a professional mortgage broker is how the business is done, and how you are treated as a customer.See her latest blog posted at http://www.mortgage-hero.com/mortgage-brokers-vs-direct-lenders/
A loan officer doesn’t necessarily have your best interests in mind when you sit down at their desk. At the end of the day, they will likely still have a job; whether you sign with the lending institution or not. A mortgage broker depends on you to make a living and doesn’t have a larger financial institution to rely on if the transaction falls apart.
Know the business. If you’re unsure about who or what you are dealing with, ask. You’re doing business for yourself. People that work in the real estate market every day likely will know a little more than you do about the business. If you get referrals for mortgage brokers and don’t know anything about the company, you may need to do a little research. Since mortgage brokers work for the commission, they need your business to survive. Unscrupulous mortgage brokers don’t care if you are beyond your means when you sign on the line because they got what they wanted out of the deal: their commission.
Poor business transactions will end the career of mortgage brokers quickly. Sometimes you may find a broker that is across the country. It is likely that the right mortgage broker isn’t in your neighborhood. You are vulnerable to people that troll for people who want a quick turn around on their property needs. It’s easier to take advantage of you if you don’t have face to face contact. The right mortgage broker is out there, and if you don’t want to work with a bank directly, as well as their loan officers, you will need to be patient, do a little homework, and take your time.
Even if you don’t have an impeccable credit score, the right mortgage broker won’t take advantage of you. It’s good for you to compare the differences between loan officers and mortgage brokers. If they are competing for your business, and they are legitimate, they will understand you need to ‘shop around’ for the best deal that is right for you. Sometimes large financial institutes have advisors who will get you the best deal with the lowest interest rate. However, great mortgage brokers who have your personal interests in mind want you to get the best deal possible because they rely on your referrals to get more business. The right brokers have ways to match or beat big banks to get you the deal you deserve.