Mortgage Broker & Direct Lender In Texas: An Analysis
If you have found the perfect house after a long search, then the next step is to secure a mortgage. A majority of people are usually stressed by this process. First, your finances must be in order, then you have to check your credit rating, and choose where to get your loan from. Typically, you have two options, a mortgage broker or a direct lender.
- A broker is usually an intermediary, assisting you to determine the best lender for your circumstances and assembling all the information required for the mortgage application.
- A direct lender, as the phrase states, is a financial institution such as a bank that will assess whether you are eligible for the loan, and if you are, provide the financing.
A mortgage broker is useful in assisting you to compare alternatives. They will collect different quotes from various financial institutions and present them together to you.
A competent mortgage broker must have the ability to pool more details together, like which lenders provide loans in your location, which provide a specific kind of mortgage that is beneficial to you, and which accommodate or reject applications on mortgages for specific home types such as condos, co-ops, or multi-family homes.
Some financial institutions work only with mortgage brokers, offering borrowers access to mortgages that they would have difficulty coming across.
Thus, rather than submitting an application to every lender separately, you are served through one individual, the broker, to receive information on the type of loan you may qualify for. After you choose your facility type, the broker will liaise with you to submit your application.
Normally, the broker receives a commission, usually a percentage of the mortgage amount. This can sway his research and recommendations. Similar to some fee-based financial planners, some brokers partner with particular lenders which affects the options they present to you.
A direct lender is a financial institution that provides mortgage facilities. A majority are saving and loan associations as well as banks.
If you elect to use a direct lender instead of applying through a broker, you might need to apply to different lenders. It’s similar to a college application. Submit an application to the one with the most favorable terms, then have a backup if your best option is not successful.
You might receive your top offer from a financial institution where you are an existing account holder or from one where you fully repaid a debt from previously.
The direct option can be quicker since there is no intermediary and you are dealing with the bank directly and getting immediate feedback on your queries.
It is not a must that you stick to using only one of the two. You can contact both direct lenders and mortgage brokers to compare their terms and then evaluate them before choosing your approach.
A broker is a right choice for you if you do not want the inconvenience of contacting different lenders. On the other hand, if you have an existing cordial relationship with your bank, you can work directly with them.