Direct lenders have a palatable advantage in how they can offer loans. Without a broker, they can be leaner, faster, and smarter. Yet, direct lenders have a few issues to work with that are analyzed below. This includes the perception of interest rates and restrictions applied.
Do direct lenders have higher interest rates?
The common perception is that direct lenders have very high-interest rates. This is not necessarily the case at all, and it may be a stigma that is rapidly fading away. What a direct lending house may have is a different type of loan association. For example, the direct lender may cap the loan at $75,000. A big bank could offer $100,000 (if the client gets approved at all). The direct lender has resources that cannot directly compete with a major bank. Where a major bank can offer a one million dollar loan for qualified individuals, the direct lender may have tighter restrictions the higher the loan gets.
What restrictions do direct lenders have, if any?
Another thing a direct lender may have is restrictions in what houses can be bought, especially if a seller is working exclusively with a major banking house. Banks have faced tough times in the past decade, largely due to their own actions. To respond, many banks have forced exclusivity arrangements. The basic idea is that a home seller only wants to work with Wells Fargo, Bank of America, etc. They will not honor offers outside these systems. This is a problem for individuals seeking a direct lending loan.
Dustin Dimisa wants potential home buyers to be informed regardless of the approach they take to get a mortgage. This is why he has developed Customer Connect. It is a platform for customers to learn about loan terms, direct lenders, the key differences, and other pertinent details. Visitors can follow Dustin Dimisa on Twitter to get a lot more details about the Customer Connect resource. It is a place that promises the utmost transparency. Knowledge is the most powerful tool a buyer can have. Too many buyers have fallen into the trappings of lenders who stall paperwork, let delays pile on, and add extraneous fees for broker services. Thankfully now, there are more options than ever before and more places to obtain information.