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Buyer Tips

Types of Lenders

For the most part, we find that loan brokers and combination lenders are more responsive to buyer needs than direct lenders. Each type of lender has its own particular advantages though, and a great deal depends upon the specific agent that handles your loan.

Direct Lenders

The major banks are in this category (Bank of America, Washington Mutual, Wells Fargo, Chase, First Nationwide, etc.). Loan agents who work for these lenders don't have the same financial incentives to place loans that brokers do, and are necessarily very protective of the bank. This may result in the borrower's interests not being as well served. With only minor exceptions, they offer only their company's loan products, which may or may not be competitive. From the borrower's perspective, this means extra work, since it is necessary to verify that better rates are not available elsewhere. Direct lenders can often close loans very quickly if they choose to do so, however.

Mortgage Brokers

Pure mortgage broker companies offer access to the wholesale lending divisions of the above named direct lenders, plus a variety of other exclusively wholesale lending sources. Loan brokers typically have little or no financial incentive to choose one wholesale lending source over another. They can be expected to select the source and loan product based on what is best for the borrower's needs since they have no proprietary loan products to offer.

The Combination Lender

This lending source offers it's own loan products and also offers brokerage access to other wholesale lending sources. Ostensibly this is a best of both worlds scenario, though to be sure, potential buyer/borrowers may want to have a conversation with the loan agent about any differences in their compensation depending on where the loan is placed - with the lender's own funds or brokered outside. For properties that are difficult to finance, combination lenders may be a good choice since they can guarantee that they will deliver a loan early in the process.

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Information deemed reliable but not guaranteed to be accurate. Listing information updated daily.