When you work with a direct mortgage lender, you apply with the same company who will be documenting, approving and funding your home loan. It’s a one-stop shop and it has some major advantages.
Pros of Direct Lenders
The benefits of working with a direct lender are many but two distinct advantages stand out:
- Competitive mortgage rates
- Control over the approval process
A direct mortgage lender is a mortgage banker. A mortgage banker can be part of a larger financial institution, namely a regional or national bank, that may also offer investment advice, checking and savings accounts and safety deposit boxes, just to name a few. A mortgage banker can also be a “pure play” mortgage banker that does one thing and does it well: approve and fund home loans.
Banks may not always be the lowest in rate. In fact, they’re likely higher than most other offerings. Banks know they have your checking account and perhaps an auto loan and maybe a credit card. And they also have your inherent trust. After all, you’ve got several accounts with them already. That inherent trust can lead to slightly higher mortgage rates, especially when compared to a mortgage banker. Check around, you’ll see what we mean.
Established mortgage bankers have built their reputation slowly and steadily with excellent customer service and an unblemished reputation. Mortgage bankers also know that they don’t have the same name recognition as a national bank. They can make up for that by providing more competitive mortgage rates at a lower cost than a bank.
Yet even though a mortgage banker can have lower mortgage rates than their industry competitors, low rates don’t mean anything if the loan doesn’t close. And that possibility of not closing is heightened when a business loses control over the approval process. That’s a huge advantage when working with a direct lender: control.
Further, your Realtor will love the fact your working with a direct lender, who has full loan flow control, rather than a mortgage broker that may or may not be around next month and has little control over contract closing dates and such.
If speed, reliability and competitive rates are important to you when applying for a conventional, FHA or VA home loan, then a direct lender is your obvious choice.