Seeds used to be considered possessions of high agricultural value. Thus, they were one of the first things to be loaned in Ancient Mesopotamia.
The Roman Empire had a few different loan forms, all of which were detailed in Roman law. A transfer of rights to property that could cover a creditor’s loss was typically used as collateral.
The same source tells us that in Ancient India, using different interest rates for different castes was considered a sin. Thus, in the beginning, interest was low, and rates were fair across the board.
Today, people typically use a mortgage broker to help finance their homes. But what is a direct lender?
Sometimes the perfect mortgage comes from a direct lender, rather than a mortgage broker.
Scroll down for a guide about direct lenders!
What Is a Mortgage Broker?
Over the years, markets for mortgages have become more competitive. As a result, the role of a mortgage broker has become a lot more popular.
A mortgage broker acts as a middle man. They’ll help you find and compare different loan options, their rates, and requirements.
Basically, they’re a comparison shopper. Once they get several quotes from various lenders, they’ll present those options and quotes to you all at once. It’s important that you still do a bit of your own research, like by looking into current rates.
An efficient mortgage broker will bring you additional information, such as which lenders offer specific types of mortgages that may appeal to you. They may also be able to tell you which lenders give loans in your area, and which ones avoid or welcome applications on loans for certain types of homes such as condos, multi-family homes, or co-ops.
Some mortgage lenders ONLY work with mortgage brokers, which means they have access to loans that borrowers won’t hear about without working with that broker.
What Is a Direct Lender?
A financial institution that offers mortgages is a direct lender. Most are savings and loans associations, or banks.
If you opt to go to a direct lender rather than a mortgage broker, you can apply to more than one lender. You can try the ones with the best rates or go for one that works with lower credit scores, depending on your credit and financial situation.
Sometimes applying through a bank that you already have an account with or one that you borrowed from in the past, will generate the best offer.
If you need your loan as fast as possible, going to direct lenders is faster since you’ll deal with them directly rather than through the intermediary (the mortgage broker).
Mortgage Broker vs. Direct Lender
When it comes to looking at a direct lender vs. broker, there are pros and cons to both sides.
PROS of a Mortgage Broker
When you work with a mortgage broker, you have the potential for low, wholesale rates.
Plus, brokers are professionals in the business. With just a bit of information, your broker will be able to find a loan that suits your needs.
There is a streamlined process for finding the best loan when you work with a broker.
CONS of a Mortgage Broker
Brokers can’t make any final decisions. The lender will still have to give you the final approval before moving forward. If you go directly to a lender, you’ll cut out the middleman.
Brokers don’t have any leeway when it comes to bending guidelines. Plus, they rely on lenders to come through and perform well for their clients.
PROS of a Direct Lender
You will deal directly with the lender and are more likely for things to get communicated effectively.
If you don’t meet any requirements or you have a standing history with that lender, they’ll be more apt to bend the guidelines for you if they communicate with you directly.
Things will move faster when you opt to work directly with the lender. Lenders also tend to have nationwide licensing, so they can potentially help you with other properties down the road.
CONS of a Direct Lender
You have to shop around and do your own research about rates and lender reputations.
You won’t be privy to any mortgage broker deals.
Tips for Finding the Right Direct Mortgage Lender
There are some tips that will start you off on the right foot when you begin looking for a direct lender.
If you have the time, build your credit. Nothing will increase your chances of getting approved and solidifying a low rate than having excellent credit.
Explore the lending landscape and research current rates so that you make sure you don’t settle for anything less than what’s fair.
Apply for more than one lender and compare the rates they offer. Consider getting pre-approved on a mortgage to boost your chances.
Don’t be afraid to check out different companies. It might be a direct lender payday loans company that offers the best rate!
Make sure you take a look at any costs, in addition to principal and interest payments. Read all the fine print and ask any questions before you sign!
What Is a Direct Lender?
What is a direct lender?
A direct lender is a bank or financial institution that lends you the money to buy your home. When you opt to work with a direct lender, you cut out the person in the middle (the mortgage broker).
Working with a direct lender is an excellent option, especially if you want to secure your loan fast. Plus, you can apply to different lenders and choose the best rate.
If you’ve worked with a lender before, either as an account holder or as someone who borrowed and paid back a loan, you may be eligible for better rates. Or, if you’re already in good standing with that financial institution, they may opt to bend the guidelines and approve you for your loan.
Browse our “Deals and Savings” section for more ways to find great rates and deals.