Deciding which mortgage lender is right for you
A mortgage is a credit facility that is used to buy a house. Many people opt to secure a house through a mortgage loan instead of renting. In this type of loan, the house is registered with the lender’s name. The house is fully transferred to the borrower after all the installments are paid. Many types of lenders give mortgage loans. Some of the most common lenders include:
- Direct Lenders
A direct mortgage lender is usually a commercial bank. The borrower, in this case, deals directly with the money lending institution. The lender evaluates the borrower’s paying capability before giving the loan. Some of the benefits of obtaining a mortgage from a direct lender include:
- A direct lender is reliable in most cases. Brokers at times may give the wrong information to increase their commission. However, with a bank, it’s different. The borrower can access all the information concerning the terms of the loan from the lender.
- A mortgage from a direct lender is also cheaper than with brokers.
- Direct lenders process the loan faster than when brokers are involved.
The main disadvantage of obtaining a mortgage from a direct lender is that the borrower does not have the chance of comparing what other lenders are offering.
- Mortgage brokers
A broker is usually an individual who advises on the different types of mortgages offered by lenders. The broker gives the borrower a list of lenders from which the borrower chooses the most appropriate. The broker then links the borrower with the lender.
Benefits of brokers:
- They offer the borrower a variety of lenders. The borrower can choose the best lender from the listed ones.
- The broker also advises the borrower. This helps the borrower to make a right decision when selecting a lender.
- With a broker, the lender saves time that could have been used in identifying available lenders.
The disadvantage of brokers:
- At times, brokers may hike the lender’s charges to make more profit from the borrower. This leads to the borrower paying more for the loan.
- Real estate companies
Most construction companies these days are also offering mortgage loans.
The borrower can decide from the available option the most appropriate one. It is essential to understand the lender’s terms and conditions.