Direct Lender or Broker: Which Gets You the Better Loan?

It depends on how well your deal fits one lender. A direct lender can only offer its own programs, so your deal has to fit its rules. A good broker works with several direct lenders and can match your deal to the one whose rules fit it best. Either way, the money comes from a direct lender.

What a direct lender does well

You talk to the company that funds the loan and makes the decision. If your deal fits its program, that can be a simple, quick path, and some investors like having one lender they go back to every time. The catch is that a direct lender can only offer what's in its own box.

Where a broker gives you more options

Lenders' rules differ more than most investors expect. One lender needs 720 credit before a first-time flipper gets its top leverage; another gets a first-timer to 90% at 700. When two partners guarantee the loan, one lender uses the higher credit score; another uses the lower. One won't do a fix and flip under $150,000; others start at $50,000. One drops a property once the appraiser calls it rural; another prices rural in from the start. One refinances 30 days after you buy; another makes you wait 3 months to take cash out. A broker who knows these rules sends your deal to the lender it fits, instead of you finding out one no at a time.

What to watch for with either one

A broker is paid a fee, and a lender with no broker fee still makes its money in the rate and points, so compare the total cost of each loan and the cash it takes to close. A good broker tells you up front which lender fits your deal and why, and doesn't send your file to every lender in town. Ask either one the same question: what happens if my deal doesn't fit your rules?

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Investment property only. Business-purpose loans, never owner-occupied. Terms vary by experience, credit, liquidity, and project strength. Subject to underwriting and approval. Not every deal or borrower will fit every program. This is not a commitment to lend.