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New Articles:
- Pennsylvania Surety Bond Mortgage Licensing Requirements
- Rhode Island Mortgage Loan Originator Professional Requirements under SAFE
- Illinois Requires Licensing of Mortgage Loan Originators
- Kansas Mortgage Broker Licensing becomes part of NMLS
- Maryland NMLS-Approved SAFE Mortgage Loan Originator Test Available
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Information herein is for educational purpose only and is not meant to be a complete statement of all state mortgage licensing requirements. Additional State and FHA mortgage licensing requirements may be required. If you need further information, we would encourage you to contact us directly.
Mortgage Brokers vs. Direct Lenders
The mortgage industry has been in the news more recently than ever before. Almost every night on the news there is something about the mortgage industry, foreclosures, loan modifications, refinances, etc. Many people looking to obtain a home loan, whether it be for a new purchase or to refinance their existing mortgage, are being a lot more careful about the decisions they make.Nowadays, there are generally two ways to obtain a mortgage. A consumer can contact a mortgage broker, or they can go to a direct lender. They could also browse sites like lovemoney.com to help them decide which of the two is the better option. Many people prefer one over the other, but what are the real advantages and disadvantages to both.
Advantages of a Mortgage Broker
There are many reasons that most loans today are originated by a mortgage broker. The number one reason is that the mortgage broker can shop around for the consumer to find them the best home loan with the best lender at that time. They are familiar with multiple lenders and can broker the consumer's loan to whichever lender has the best interest rates and service at that time. They also know what lenders are more strict in certain areas than other lenders. If a consumer uses a good mortgage broker, this advantage can really benefit them in the long run.
Advantages of a Direct Lender
The major advantage of a direct lender is that the loan officer usually works along side the underwriter much more closely than with a mortgage broker. The salesperson will often know their company's home loan products much better than a mortgage broker since the salesperson only works with one Lender, their employer. This advantage can help a consumer know up front what issues there may be with obtaining a loan. However, with a good mortgage broker, they may know the issues just as well as a salesperson employed by the Lender.
Disadvantages of a Mortgage Broker
The greatest disadvantage of a mortgage broker is that if they are not good at their job, they may submit the loan to the wrong lender and waste you valuable time. If the consumer can find a good mortgage broker that knows many different home loan products with many different lenders, then the consumer will have an invaluable resource for getting their loan done right the first time.
Disadvantages of a Direct Lender
Direct Lenders only provide one set of home loan products. If a consumer does't qualify for any of the Direct Lender's home loan products, then the consumer may be forced to go find another Direct Lender or Mortgage Broker on their own. This also can waste valuable time. However, if the Direct Lender pre-approves you, then you have a very high likelyhood that you will be able to close the loan.
Either option could be a good fit for your situation. If you know a good mortgage broker, then you may want to consider working with them to find the best home loan product for your situation. Make sure that the person you are working with to originate your loan knows what they are talking about. Shopping around and talking to a few different Mortgage Brokers and Direct Lenders may give you a better idea of who to work with through the process.
04.20.2009. 15:03