If you are looking to buy a home to make your dream successful; you may confuse the first time to choose a direct lender or mortgage broker. The Mortgage Industry is full of individuals. The entities that help people get access to financing for one of the biggest investments in their lives. These entities include Direct Lender VS Mortgage Broker. While they may provide services to the people looking for mortgage loans, they are very different. In this blog, we will discuss that what is the difference between the Direct Lender and the Mortgage Broker? What are the good points of using Direct Lender vs Mortgage Broker? What are the benefits of choosing Real Estate Diary?
In 2021, according to a recent Oliver Wyman survey, it is found that mortgage borrowers can process all information before applying for a mortgage. Usually, the choices they make inconsistent with the opinions they express. Most borrowers show that price is critical to their decision. According to their survey, 71% of borrowers apply for the Direct Lender, and 63% of borrowers consult Mortgage Broker in 2021. They consult just one type of information source before making their decision on where to apply. Many people choose the lenders because they seem to them less expensive.
Differences Of Using Direct Lender VS Mortgage Broker:
It is crucial to know the difference between Direct Lenders vs. Mortgage Broker. On the one hand, the Mortgage Broker may appear the same to lenders. However, a Mortgage Broker does not make loans. A Broker has access to different loan programs from many lenders. Therefore, they can match you with the best-fitting Direct Lender for your scenario. They take all of the hard work. Also, they stress out shopping around for the best deal. They can also streamline the loan process and perform automated underwriting and process applications. Even lenders use brokers as marketing and processing arms. This can decrease their marketing and operational costs. In turn, lenders can offer wholesale mortgage rates to brokers.
On the other hand, Direct Lenders hold specific lender licenses. Correspondent lenders are one of the types of lenders who act as a broker lender hybrid. The main work that Direct Lenders do is to fund and close the loan and sell that to Direct Lender. Moreover, Direct Lender has the actual money to fund mortgage loan. In some cases, they use lines of credit. They might also serve some of the loans they originate. Also, they might securitize or sell them in the secondary mortgage market.
Why Choose Direct Lender VS Mortgage Broker:
Some people choose Direct Lenders, while others choose Mortgage Brokers according to their opinion. But, it is crucial to know which one is best to work with. Before deciding the best, people need to research Direct Lender Vs Mortgage Broker. If you determine to use the Mortgage Broker services, they should be licensed by Financial Conduct Authority. There are situations when using Mortgage Broker services that might be useful. For example, a Mortgage Broker could help to find your eligible product if you have a poor credit rating. Moreover, the Mortgage Broker service might be valuable if you have no time to do research.
However, there are also few situations when choosing a Direct Lender is better for you. If you have extra time, enough mortgage industry knowledge, a direct lender may be your best choice. Direct Lender makes and funds your loan in-house. The person you work with should have a role in making the final decision. Moreover, they can able to help as a consultant by closing your loan. This means lenders will give answers your questions quickly. The approval of your loan can be done quickly. Hence, working with Direct Lender can also be helpful for you.
Good Points Of Working With Direct Lender VS Mortgage Broker:
There are some reasons to work with the Direct Lender vs Mortgage Broker. These reasons include licensing, flexibility, and so on.
Licensing:
In many cases, a direct lender is authorized to provide mortgages in 50 states. Many mortgage brokerage companies are regulated in few states. This can create issues if you are buying property where the broker is not licensed. This also means that you have more chances to qualify for a better loan with Direct Lender. Moreover, you can also choose Realestatediary to choose the best loans at better rates.
Flexibility:
A direct lender abides by Mortgage Broker by some rules. The broker does not have the discretion to waive particular requirements to gain your business. A direct lender sets its rules. This means that they have the flexibility to waive them under some situations. This helps the borrowers because Direct Lenders do not have to charge fees from the borrower to make up for back-end fees.
Speed:
If you compare the speed of Direct Lender vs Mortgage Broker, it will prove a clear winner. With Direct Lender, everything is processed in digital processes. Due to this, catching mistakes is done in the blink of an eye. Usually, this means a faster turnaround than a broker who has little power to control over loan processing. For example, direct lenders can beat the industry average closing time by 60% only because of digital benefits.
Most Advantageous Deal:
A mortgage broker represents your interests than the lending institution. Brokers act as an agent or knowledgeable consultant and provide you better loan products and interest rates. They can identify your short and long time motives as well.
Saves Your Time:
A mortgage broker also saves your time. Brokers only need one application rather than completing forms for every lender. They guide you to the information that shows cost differences with current rates.
Good Points Of Choosing Real Estate Diary:
Real Estate Diary is the top-ranked team of experts. They have more than 22 years of experience in the mortgage industry field. There are many good points why should you choose Real Estate Diary. Customer satisfaction is the topmost priority of the Real Estate Diary. Moreover, you can select Real estate diary because of their highly skilled experts and their experience. Lastly, Real Estate Diary deals with every borrower according to their situations and provides better loan rates.
Final Lines To Remember:
Conclusively, it is crucial to do your research before applying for a loan. After looking at Direct Lender vs Mortgage Broker differences, good points, you can easily choose Direct Lender vs Mortgage Broker according to your opinion. Moreover, you can select real estate diary due to their best experience and other qualities. Also, you can make your dreams successful by choosing real estate diary.
Frequently Asked Questions:
Is it better to use a mortgage broker or a direct lender?
Honestly speaking, it totally relies on your loan application. If your loan application is not so strong and has some issues that mean bad credit, low down payment, it will be better for you to choose a mortgage broker who will consult you with a lender as per your situation. Apart from that, if your application has no issues that mean your credit score is good, you will need to submit your loan application directly to the lender to get loan approval.
What is the difference between a direct lender and a mortgage broker?
The main difference between a mortgage broker and a direct lender is that a mortgage broker brings mortgage lenders and borrowers each other by acting as an intermediary between these two. On the other hand, direct lenders are financial institutions that approve and finance mortgage loan.
Why you shouldn’t use a mortgage broker?
You should not use a mortgage broker because a mortgage broker charges more points and higher closing than a traditional lender. Moreover, you may not get a better deal by using a mortgage broker.
What banks are direct lenders?
A direct lender is financial entities that use own money to fund mortgages. Direct lenders include banks, credit unions, as well as massive lending corporations.
Is it worth going through a mortgage broker?
It will be beneficial for you to go through a mortgage broker if you want to find access to home loans that are not really advertised to you. Mortgage brokers may also be able to help them qualify for the low-interest rate as compared to most of the commercial loans that are available.
