When comparing the different types of lenders available, you will find that three of them stand out in terms of the most beneficial offers available: mortgage brokers, direct lenders and banks. Nevertheless, before actually choosing a product offered by any one of these providers, it is essential to know all the basics of what you should expect.
Banks and Mortgage Brokers
Two of the first places borrowers will often find themselves checking for advantageous mortgage offers are banks and mortgage brokers. While working with both these entities does present some advantages – such as the fact that you can add your mortgage to an existing banking profile or that the broker can do all the legwork so you don’t have to – there are many potential problems that could come up as well.
One of the main disadvantages of trying to get a good mortgage loan from a bank is the fact that their programs are quite conservative. Banks sell their own financial products, and there is very little room for debate on the specifics in terms of guidelines and exceptions. They also do not carry a diversity in programs and products which can also create issues when shopping for a mortgage.
On the other hand, brokers can indeed help you with some tricky deals and compare mortgage rates from many different banks, but they will likely overcharge you for their services, and you may not gain access to programs with certain select banks. Moreover, brokers will usually shop for rates, rather than taking the entire program into account. Another downside to using a broker is that there is no way for them to know the ins and outs of each individual bank that they send their loans to. Meaning they are a loan officer not an underwriter, they are on the sales side, more concerned with rate than qualification and investor overlays.
Of course, this entire topic has been heavily debated by top financial experts, and there is no real standard according to which one can fully determine the reliability of specific mortgage brokers and banks. The principle of the points presented here still stands, however, showing the general lacks that borrowers should look out for when trying to shop for any particular mortgage offer.
The Advantages of Choosing a Direct Lender
Many consider direct mortgage lenders to be the top choice when it comes to choosing a good mortgage loan. One of the main reasons behind this fact is the direct lenders’ control over underwriting and funding, as well as their overall stability.
To give a clear example of what that stability factor entails, one can look at cases when loans that have initially been approved by investors were eventually denied as a result of a guideline issue. With most lenders this can cause significant problems, including a solid decline; however, direct lenders are able to change investors or guidelines while the underwriting process continues to be underway.
In a nutshell, contacting a direct lender can really pay off both in terms of getting affordable mortgage rates and reducing the hassles involved with getting your loan approved and handling all the details of the mortgage. As a result, you can be sure that the home you want to buy is practically guaranteed as long as you find a reliable direct lender to work with.