If you want to purchase a piece of property but do not have the cash in hand yet, then getting a mortgage is the best choice. If it’s your first time to applying for a loan, then you may be puzzled as to where to get a mortgage: bank, direct mortgage lender or mortgage broker?
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Directly Going to a Bank
Most first-time homeowners go to big banks, hoping to get their best mortgage deal. They are assisted by loan officers in obtaining the desired principal amount and interest rate. The borrower is interviewed to assess the credit history, the capability to repay the loan, and evaluate the financial status.
Going directly to a bank may be beneficial because of its stability and good reputation as a money lender. Also, you don’t have to pay an appraisal fee. However, getting all the requirements done by yourself is complicated and takes a lot of time. Moreover, loan officers may not give you a variety of options and may offer you a higher interest rate because they work for a specific bank. Meaning you wont necessarily get a good deal.
Hiring a Mortgage Broker
Mortgage brokers work as a connector between a mortgage lender and a borrower. They do most of the work in the mortgage process – find the best lender with the best deal and complete all the required documents to be submitted. They act both as your concierge and financial adviser. They are well aware of the entire mortgage market. They have various bank and private lender connections. If you want to get the best mortgage deal, whether from a bank or a direct lender, then just talk to your broker. If you want the mortgage process to be easy and fast, hiring a mortgage broker is your best bet.
Finding a Direct Mortgage Lender
For newly self-employed individuals who can’t provide a third-party validation, private lenders may be the best option. Qualifying for a loan is easier with this type of lender than that of the bank. This is because direct lenders do not care much about a person’s credit rating. What they really consider is the amount and location of the property to be mortgaged.
If you want to own a small-scale investment such as a condominium or if you want to redesign and polish a foreclosed property, then just borrow private funds instead of dealing with a bank’s stringent parameters. If you were denied by a bank of your first mortgage or your mortgage renewal, then you have no choice but resort to direct lenders.
Private funds may be very beneficial as fast cash but they are not ideal as long-term loans. That is because of their very high interest rates (can get as high as 20%), and additional costs such as appraisal, legal fees, mortgage broker fees and legal fees.