The Difference Between Direct Lenders and Mortgage Brokers

Mortgage and Lending with Horizon Lending Services, LLC NMLS # 942863

When you're shopping around for a mortgage, you have two options when it comes to choosing where you're going to get financed: a direct lender or a mortgage broker. Within these two pools, you'll find a wide variety of each who can offer you different loan terms and interest rates. However, choosing which one to swim through can be a challenge in itself.


Direct Lenders

The main benefit of working with a direct lender, like your banking institution, is that everything will be under one roof. This means your direct lender will take care of everything related to the loan process. They'll sit down with you from day one, review your application, and be the one responsible for supplying the funds you need to purchase a home. This will speed up the time it takes to get approved, allowing you to purchase a home faster.

In fact, most direct lenders offer a same-day approval method, especially if you happen to be applying online (in which case you can get pre-approved in a matter of minutes). This also helps protect your personal information from third-parties. This will keep you from receiving annoying phone calls from third-party lenders about loan offers you likely don't need. You should ask the direct lender about their privacy policy, however.

The difficulty that comes along with a direct lender, though, is that you'll find it harder to compare rates. If you want to check the rates of multiple direct lenders, you'll have to sit down with each lender individually and ask about their rates. This can add time to the process and leave you flustered. You might also miss out on a better rate because you didn't check with a particular direct lender yourself. You'll also be faced with lower approval rates because you won't be able to apply with as many lenders "manually" compared to the number of offers you'll get through a mortgage broker.


Mortgage Broker

The primary benefit of working with a mortgage broker is that it's their job to present all of your options to you in one easy place. You'll provide the broker with details of your financial situation and it’ll be their responsibility to send your application out to all of the lenders they work with. They'll basically do the legwork for you. This saves you time, and it helps you shop around for the best rate with ease by being able to see multiple offers from a wide array of different lenders.

There’s a cost for convenience, however. Usually this cost will be in the form of a 1% to 2% fee of your mortgage's overall amount paid to the broker for the work they did. This can be well worth it, though, if you want to save yourself the time and trouble of going around to multiple lenders yourself. They may also have connections to lenders who you wouldn't have found yourself, but you still need to do the due diligence to make sure the loan you look at fits your needs.


Want to get pre-approved for a home loan? Contact Horizon Lending Services today to learn about your loan qualifications.


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William Feela
Realtor, Whispering Pines Realty 651-674-5999 No.

I prefer direct lenders.  Seldom late or any issues 2 days efore.

Apr 06, 2018 07:05 AM #1
Kristin Johnston - REALTOR®
RE/MAX Realty Center - Waukesha, WI
Giving Back With Each Home Sold!

Thanks for sharing this information...happy weekend to you!

Apr 06, 2018 07:20 AM #2
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Sharon Mistowski

Horizon Lending Services, LLC
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