This is a critical question for a first timer in any real estate transaction. It is imperative to know the differences and similarities in the terms and conditions applied by both direct lenders and mortgage brokers. Based on a thorough comparison and a well thought out knowledge of what you need, you’ll be able to decide whether you should use a direct lender or broker. Their working styles are quite similar, but they also have some very fundamental differences.
Similarities between the Lending Sources
Both work as lending institutions and they advertise through different media sources to attract clients. They both collect information regarding your financial status and circumstances to decide whether to lend you the required amount of money or not. They can assist you in almost the same way and help provide you with the education to develop an understanding of the mortgage process. They are helpful and can explain any complications that you may encounter while trying to obtaining a loan.
Difference between the Lending Sources
Using a mortgage broker tends to give you a variety of options for lending sources. Using a direct lender, on the other hand, will limit you to using only one source, the lender, to gain the money directly. The mortgage or interest rate can vary depending on which source you choose to use. Mortgage brokers will generally charge comparatively less rates when compared to direct lenders. Although processing times can vary among different sources, mortgage brokers tend to have a faster processing time. Mortgage brokers are well established organizations and have ample staff, while direct lenders are small banks with maybe 4 to 5 staff members.
Certain financial circumstances, such as, a higher credit score, lowering debt to your income ratio, and a bulky down payment, can give you the power to negotiate and bring down the overall fees and costs that you have to bear while obtaining a mortgage loan. This is a trend that is equally observed among mortgage brokers and direct lenders.
What should your decision be?
The decisions to use a mortgage broker or a lender will ultimately come down to your specific circumstances, but if you are unable to make a decision, then stop worrying and contact Joseph M. Ghabour & Associates because they can help you chose the right option given your circumstance!