The Benefits of Working with a Direct Lender
A mortgage broker technically does not lend money, but brokers the transaction. They act as go-betweens, helping select financers at a wholesale level for a consumer. A mortgage banker is part of a larger financial institution, such as a bank or credit union, and has knowledge about checking and savings accounts, including long-term investments, etc. The direct mortgage lender ultimately makes the mortgage with the bank.
When working with a direct mortgage lender, it simply cuts out the mortgage broker and allows a consumer to directly work with the direct lender that is brokering the loan with either a bank of a group of hard money lender investors.
The benefits of working with direct lenders include two distinct advantages:
1. Direct lenders offer competitive mortgage rates, which help consumers find the best deals on their real property investments.
2. Direct lenders have complete control over the entire lending process, which allows them to forgo difficult underwriters, overwhelming government loan terms and much more.
Banks do not necessarily have the lowest mortgage rates. Most people have their savings and checking accounts, auto loans, credit cards and other financial accounts with banks, which make it easier for these institutions to charge consumers slightly higher-than-average mortgage interest rates. It is always best to shop for mortgage rates, because even a slightly lower percentage means substantial long-term savings for consumers.
Direct lenders are in control of the entire lending process, which helps forgo complicated underwriting services, which often add delayed elements to real estate transactions. Real estate agents also prefer working with direct lenders, as it takes substantial time, worry and hardship out of standard real estate transactions, allowing them to close quickly and on time.
Having a fast, quick closing makes a substantial difference to investors. Prolonging real estate closings costs investors’ valuable time and money as they often set up contractors, services, development schedules and much more. In the world of real estate development, time is money. Being hindered by underwriters’, costs real estate developers’ valuable time and money, especially for their teams of workers, contractors, project managers and other valuable personnel. It also substantially affects schedules, potential completion dates and times on the market, which all impact the entire construction process. This can also ultimately interfere with seasonal schedules, drawing out completion dates into less optimal weather.
Overall, working with a direct lender or a hard money lender gives real estate investors more control over their investment projects.