If you are about to finance a new home, some questions might appear over your head. It’s normal not to fully understand how to use direct lenders to get loans before actually receiving one.
Thus, it is now time to understand what direct lenders are and how they can help us receive a loan.
Keep in mind that, nowadays, online lenders are the top priority of most users. We live in a digital era, which allows us to look at many alternatives before making a final decision.
First of all, it is important to mention that we are not talking about direct payday loan lenders when we talk about direct lenders.
In this case, a direct lender can also help small businesses receive an amount of money without the need for a middleman.
Nonetheless, direct lenders are now the main option when it comes to financing a new property.
What are Direct Lenders?
Imagine that you are about to buy a new house, but you don’t know how to finance it. In this case, the first thing that comes to our minds is getting a mortgage with the help of a broker.
However, direct lenders are also an option you should take into consideration.
Mortgage direct lenders are financial institutions that provide mortgages directly to borrowers.
Consequently, the borrower will receive the amount of money they asked for without intermediaries such as banks, brokers, or private equity firms.
Direct loan lenders only work with people that directly apply with their company instead of using an intermediary to complete the process.
Of course, there are hundreds of direct lenders all across our country. This creates the need to do profound research by ourselves before selecting a financial institution to work with.
What are mortgage brokers?
Mortgage brokers act as intermediaries when it comes to receiving a loan to finance a new home.
In this case, mortgage brokers do not actually fund mortgages, they just help you during the process so you can adequately get the loan you are asking for.
They gather all the documentation, credit reports, borrower’s income, and other information needed so they can determine how much you can actually afford.
Naturally, they act as the link between the lender and the borrower during the entire transaction, so it all works properly.
Mortgage brokers have access to loans from a high number of lenders. Thus, the borrower doesn’t need to perform deep research to finally get an option that really suits all their needs.
They will provide you with various alternatives so you can make the decision based on all the information you received from them.
Pros and cons of both of them
Back in the day, lenders could take days or even weeks to have an answer for your loan application. They needed to check a lot of files and contact bureaus before making a decision.
So it’s normal that people are still thinking that lenders can take a lot of time in the loan process.
Now, since all our information is digitalized, they can actually check all your financial information within minutes and make a decision in a matter of hours.
So, you can potentially have your money deposited in less than an hour once your application is approved.
However, if you are consulting with a well-known lender, you will need to wait because of the number of requests they get on a daily basis.
To understand the pros and cons of mortgage brokers, we have created this comparison table
|Forget about investing your time doing research: mortgage brokers will give you multiple options to choose from.||Naturally, you need to pay the broker: there’s a final fee based on the mortgage amount.|
|They help borrowers with their applications during the entire process.||It doesn’t happen all the time, but some mortgage brokers can increase profits by hidden costs related to your loan.|
|Saves borrower times by performing all the bureaucratic tasks.||Borrowers need to beware if the mortgage broker they selected is properly credentialed before working with them.|
|Mortgage brokers know which lenders are the right ones to actually secure a loan for a person.|
Now, let’s take a look at direct lenders pros and cons:
|Direct lenders are ready to give you a personalized solution for your needs||You need to apply individually to each lender before selecting a final option.|
|They are available to answer all of your questions related to your loan||The comparison process might take months.|
|Your loan will be processed faster, and there won’t be hidden costs in it.||It’s time-consuming: if you don’t have enough time, you might end up making a bad mortgage decision.|
|Direct lenders help you save money because you don’t have to pay intermediaries to help you.|
Which one is better for my specific situation?
It’s clear now that there are some viable home loan options to fulfill your dreams.
Nonetheless, at the end of the day, it’s our duty to select the best one to cover our needs.
It’s crucial to have in mind that loans are a powerful tool when it comes to improving our finances. We should always go one step beyond and analyze all the possible outcomes before deciding to work with a particular financial institution.
Mortgage brokers are definitely better for people who don’t have any minute to waste, and they want things right here, right now. If you have a good credit score and wish to have a loan approval done quickly, then this choice is for you.
On the other hand, direct lenders will provide you with customized assistance for you to find the best loan option while saving money during the process.
Of course, in this case, you need to have enough time to invest.
Do you want to finance a home right now, or can you wait some months before finally getting a loan?
Do you have enough money to pay a broker, or do you want to save as much as possible?
Answering these questions will give you the answer you are looking for.