If you’re in the market for a mortgage, it’s important to do your homework to get the best deal. However, when determining which financial institution is the best for your home purchase, it can be hard to discern your options. Read on to learn more about a direct lending mortgage.
Understand What a Direct Lender Does
When you shop for mortgages, you can choose to work with a direct lender or a mortgage broker. A direct lender is exactly what it sounds like, a financial institution that works directly with you to determine mortgage eligibility and details of your mortgage, including interest rates.
A mortgage broker is a middle man who represents a group of lenders. The mortgage broker can help you shop mortgages and interest rates but is not a representative of any one lender specifically.
A Direct Lending Mortgage May Simplify Your Home Buying Process
The most obvious advantage of working directly with your lender to secure your mortgage is that you cut out the middle man and handle the details on your own. Typically, this allows the approval process and any necessary paperwork to go faster since there isn’t any back and forth outside of your relationship with the lender.
Advantages to Working Directly with a Lender
In addition, direct lending mortgages tend to be more straightforward than working with a mortgage broker. When mortgage brokers started representing lenders, there was little regulation, which led to some less than admirable business practices.
While there have been significant improvements in this area and mortgage brokers are licensed in each state where they practice, there is always some level of risk when it comes to using an intermediary to make such an important financial decision. Additionally, because the mortgage broker shops around for you in hopes of finding the best deal, you typically owe a small fee when you finish your shopping process.
A Personal Touch
When you work with your lender directly, you get the advantage of a personal touch with the financial institution behind your mortgage documents. You can sit down with representatives directly to work through your eligibility paperwork and maintain an open line of communication throughout the process. This allows you to become a name and a face, rather than another number on another mortgage document.
Take Time to Shop Around
Even though there are advantages to choosing a direct lending mortgage, it’s important to shop around when you’re looking for a mortgage. Get quotes from multiple financial institutions before setting on any one mortgage rate specifically. If you’re short on time or resources for gathering the information on your own, don’t be afraid to reach out to a mortgage broker for help with shopping rates and institutions.
Remember, even if a direct lending mortgage is right for certain borrowers, it may not be the best option for you. You should choose a lending option that works for your family and finances.