DIRECT LENDER

Although not a bank, they do service their own loans. Which means they are the ones putting up the money, and the ones you have to pay back. They do not sell their loans off to the bank, which can make them more flexible with their qualifications.

 

For example:

                     Most Correspondent Lenders (or mortgage brokers) require 2 years of paystubs, and your full tax return, while a Direct Lender typically will only require 1 year and your w-2.

True Lenders can be great for 1st Time Homebuyers because of their more relaxed requirements and their access to down payment assistance programs (which can save you $1000's!) Typically True Lender’s can get loans approved for people who couldn’t get approved elsewhere.

  • Can work very quickly and typically close on time.

  • Are not subject to overlays, and can be more flexible in their requirements.

  • Underwrite (take responsibility for loan) early on, which can save lots of headaches later (banks wont underwrite until near closing date, which doesn't leave much time to correct issues)

  • Very customer focused and referral driven.

  • Can get creative with loans to help first time buyers with down payment assistance etc.

  • More control of all aspects of the loan process (ie. They don’t have to wait for a bank to respond or approve)

  • Do not “shop around” between banks, so naturally they will have less loan options than a broker.

  • Some will charge extra fees for their service.

  • Typically way smaller than a bank (which means they may know market better, but don’t have billions of dollars at their disposal)

  • You need to make sure they are reputable and competent companies, as they are not typically national corporations like Wells Fargo.

Cons

Pros

(TRUE LENDER)