Mortgage Lenders

Brokers vs. Direct Lenders

The decision to go with a broker vs. a direct lender can seem monumental, and there are clear advantages and disadvantages of working with either. First-time buyers, for instance, might feel more comfortable with a broker because they give personalized attention, and they do much of the work for you. Also, someone who is new to the entire process might want some extra help.

Who is a Broker?

A broker is, in essence, your representative or agent that will shop for mortgage companies for you. They get paid by the lender, the borrower, or in some cases, by both parties. This is by a percentage of all closing costs and points charged to the borrower. They are an independent business, and it is always smart to find out their fees and costs beforehand.

• Click <here> to see the difference between an Upfront Mortgage Broker (UMB), and a traditional broker.

Who is a Direct Lender?

Direct lenders handle the entire process, from pre-qualification to the closing process. They are the actual source of the funds that will be distributed to the borrower. Because they control the entire process, they often can provide the best rates and fees, because there is no intermediary. In most cases, the interests of the loan officers are allied with the borrower, because mortgage companies are highly regulated by the federal government. Types of Mortgage Lenders include: FHA lenders, to help those on the lower income bracket, who are insured by HUD and the FHA (Federal Housing Administration); Subprime Lenders, for those with less than perfect credit; VA Lenders who are for Veterans; and Commercial Lenders, for those who are interested in buying property to start a business or for an office.

• For a List of well-known Mortgage Companies, click <here>