If you want to buy a new home, one of your first steps will be to secure financing. This is the most stressful part of purchasing a new home for many people—you must get your finances in order and figure out where to get a home loan. Even if you have already known youn need a hard money loan, it may surprise you to find out there are several different types of hard money lending sources to choose from.
There are two types of hard money lending sources available to most home buyers: direct lenders and mortgage brokers. What is the difference between direct lenders and mortgage brokers? What are the advantages and disadvantages of each? Read below to determine the best fit for your needs.
What is a direct lender?
A direct lender is any financial institution or lender, including commercial banks and hard money lenders, that can offer a mortgage directly to the borrower without the aid of a broker or middleman. This can be in the form of owner occupied hard money loans, or even non-owner occupied homes. To find a mortgage through a direct lender, you must send an application to each individual lender.
What is a mortgage broker?
A mortgage broker is the middle-man for buyers and potential lenders. They do not actually make loans or use their own money to fund the mortgage. Instead, the broker acts as the middleman and handles most of the loan process and paperwork for the buyer.
The primary benefit of a mortgage broker is they can provide quotes from different lenders and present them to you all at once. Instead of taking the time to apply to each lender separately, you only need to speak with one broker to see which loans you qualify for.
Why should buyers work with a direct lender?
Working with a direct lender has a lot of benefits—costs and interests rates are lower than with mortgage brokers; there may be more loan options; the loan will be approved sooner; and increased flexibility. One of the most significant benefits of hard money direct lenders is that it is easier to solve any potential problems that arise. For example, compared to working with a broker, you are better equipped to answer any questions the lender has about your application which may speed up the application process.
If you would like to know more about working with hard money direct lenders here at Equity Wave Lending, please contact us right away! We are a private money lender that serves California’s residential and commercial lending needs.