Money Talk With Slater

Making Money Across the Board

What is the Difference Between a Broker and a Direct Lender (Part 1)

A mortgage lender, banker, and direct lender all mean the same thing. 

You’ve been on a mission to accomplish your financing goals and it’s now that time. With numerous options and information floating around out there about home financing, it can be difficult to know where to begin.

You’ve been referred to a mortgage broker, been told to look at several banks, or even been exposed to the term direct lender and mortgage lender. Below is the difference between a direct lender and a mortgage broker.

What Is A Direct Lender?

You’ve heard the terms mortgage lender, mortgage banker, and direct lender. While they sound different, they mean the same thing. A direct lender is just a lender or bank that works directly with a homeowner, with no requirement for a broker or middleman.

Direct lenders fund loans and then once funded will sell them in the secondary market to investors or agencies like Freddie Mac or Fannie Mae. At times, instead of selling the loan, the direct lender won’t sell the loan and will serve as the mortgage loan servicer, taking mortgage payments too.

What’s A Mortgage Broker?

A mortgage broker is an intermediary who brings homeowners/mortgage borrowers and mortgage lenders together but doesn’t use its own funds to offer mortgages. A mortgage broker collects paperwork from a borrower and forwards that paperwork on to a mortgage lender for underwriting and approval. A mortgage broker is thought of like the middleman of the industry.

It’s good to explore your various options. If you’re reading this, you’re already on the correct path to accomplishing your financial goals. If you still can’t make up your mind, it might be best for you to get in touch with and look around between mortgage brokers and direct lenders. Or, you can do your own online research to see which one works best for you.


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