So, you need money to purchase a home, and you come across two ways to get money: a mortgage broker and a direct lender. What’s the difference between the two? Which one is the better option? Let’s find out:
What’s a direct lender? As the name suggests, they’re the ones you go to for the mortgage. Compared to a mortgage lender, opting for a direct lender allows you to apply to different lenders, so you can compare rates and figure out which one is the best deal for you.
In most cases, the direct lender you’ll first look at would be the bank you have your debit and credit cards from. Usually, you’ll get to enjoy the best deals from them. Moreover, whether you’re borrowing from the bank you’ve already worked with or an entirely new one, the process of getting the money will usually be much faster than using a mortgage broker who acts as an intermediary.
What’s a mortgage broker? They’re an individual or an organization that brings together both mortgage lenders and mortgage borrowers together. In addition to that, their job is to gather the right paperwork from the mortgage broker and give it to the mortgage lender for approval. If you were the borrower, a broker will look for different banks for lenders that’ll satisfy your needs.
The main benefit of working with a mortgage broker, then, is that rather than looking for and dealing with multiple mortgage lenders yourself, you deal with one person—the mortgage broker—who then looks for the right lenders for you. That said, once you’ve chosen which lender you want to borrow from, the broker will continue to assist you in filling out your application.
That said, there are considerations to make when choosing brokers. First, you need to work with a broker that can gather all the right information that you need, such as lenders that are available in the area, as well as specific mortgages that might interest you. Secondly, you must be sure to work with a mortgage lender that follows regulations. That’s because, before, many of these brokers weren’t regulated, meaning that what you compensated to them will depend on their requirements. For example, some brokers might try to convince you to borrow from high-risks mortgage lenders or even borrow more money than you need.
Which ones to choose
So, the decision lies between mortgage brokers and direct lenders. Which one should you choose? Well, if you want to secure a mortgage quickly, a direct lender will do it faster. If you’re going to weigh out your option thoroughly or need assistance through the borrowing process, a broker would be the way to go.
Put simply, the final decision rests on your shoulder and your needs. If you’re still wondering which ones you want to opt for, though, feel free to choose both the lender and the broker. That way, you can see which ones give better rates, and you’ll have a better idea of what you can opt for.