Direct Lender or Mortgage Broker

Most people think a mortgage broker is the middle man in a lending transaction and they think that by going to a direct lender they will save time & money. Mortgage brokers have access to multiple lenders and hundreds of loan programs. This gives the mortgage broker an advantage over the direct lender who can only offer you programs that they have.

A direct lender is generally not only limited to their specific home loan programs but they are limited to use the rates and pricing that their company offers and they also must use thier company's underwriting guidelines. A mortgage broker however is able to shop available programs and different underwriting guidelines to find something that may be more suited to your individual specific needs. Mortgage brokers are also able to shop different rates and pricing. Therefore, you can usually obtain the exact loan you are looking for with the rate that you deserve by using a mortgage broker, as opposed to maybe having to settle with something else from a direct lender.

Many loan officers working for brokers operate on a flexible schedule. They are often willing to drive to meet you at your home - even during the evening or on weekends. This flexibility allows for an entirely different level of service, and can make getting your mortgage much more 'hassle-free'.

Direct lenders work with retail rates. Mortgage brokers have access to whole sale rates. Often you can get a more competitive rate by working with a mortgage broker.

Although some mortgage bankers have the capability to broker loans out to other banks, most prefer to sell their own loan products, because they can usually earn more in finance charges with their in-house mortgage programs. Mortgage brokers usually have no preference to which bank to submit a loan application to. There only concern is the loan program being right for the borrower.

Mortgage brokers do not lend money. Most of them are firms providing services rather than loans. The lender is the one who provides the money to the borrower at the closing table. The lender also makes the final decision regarding loan approval.

One of the biggest benefits a broker is able to offer is that they are able to offer you the type of product that is best for you, given your current situation. They are not limited to a couple loan types that may only be best for a small percentage of the population.

A mortgage broker counsels borrowers on the loans available from different lenders based on their current financial situation. They also counsel on any problems involved in qualifying for a loan, including credit problems, take the borrower's application, process the loan application and walk the file through the closing process.

Direct lenders loan money using their own funds while Mortgage brokers are independent contractors that can submit loans to various lenders that fund loans according to their guidelines. Mortgage Brokers can offer borrowers a greater variety of programs.

» DISCLAIMER: The information contained in this article on 'Direct Lender or Mortgage Broker' is a collection of contributions by licensed mortgage professionals and is not the opinion of Broker Outpost LLC. Always consult a licensed professional before applying for a mortgage.