If you are in the market for a new home, one of your first steps is to ensure your financial situation is reviewed and on track. That includes researching your options and working on getting pre-approved for a loan. While this used to involve walking into your local bank or credit union to apply for a mortgage, today’s online lending space has opened a range of options, including direct lenders and mortgage brokers.
Knowing what each of these options entails, including the difference between these a mortgage broker and direct lender, can help you decide which is the best option for your financial situation.
What is a Direct Lender?
A direct mortgage lender is exactly what it sounds like – direct. A direct lender provides the steps to the process in-house. From application through close, a direct lender is a one-stop-shop for your home loan process.
Mortgage Broker vs. Direct Lender
Mortgage brokers serve as intermediaries for the home lending process. They take the necessary information, combine their knowledge and expertise, and provide the best options for your situation and needs.
Once approved, you deal directly with the service provider or loan originator. So, what does a direct lender mean? With a direct lender, you go directly to the source. The person taking your application has a role in making the final decision and, in many cases, can serve as an ongoing point of contact for your loan.
What are some of the other differences between a mortgage broker and lender?
A mortgage broker is bound by the guidelines set by the individual lender. The broker does not have the discretion to waive some requirements to gain your business. A direct lender sets its qualification guidelines, which means that it can entertain waiving them under certain circumstances.
Every lender charges certain fees for processing a mortgage loan; however, the fees charged by mortgage brokers tend to be higher than those charged by direct lenders. This is because the broker has to charge fees above and beyond those charged by the lender to make money.
With a direct lender, speed is advantageous due to the ability to perform most of the necessary processes in-house. This provides faster turnaround times, which gets you the loan in less time, which comes with several benefits, such as the ability to lock in at a rate earlier and less time waiting on processes to complete.
When working with a mortgage broker, there may be a tendency to prioritize products that offer the most significant monetary gain. This isn’t always the case, but it is a possibility. With direct lenders, the loan officer typically does not receive a commission based on the rate or fees associated with your loan. This allows for more freedom in exploring the rates, loan options and plan that fit you best.
At Wyndham Capital, we offer competitive rates on a wide array of loan programs. Our loan officers will take the time to understand your financial needs and goals in order to create a personalized loan solution. It is this commitment to award-winning service that has earned us the trust of thousands of customers.
Interested in learning more about how Wyndham Capital can help you achieve your home lending goals?