The Difference Between Banks, Direct Lenders, and Independent Mortgage Brokers - VNM

Hi, it's Dave Holland with Veterans National Mortgage.

Here to talk about the difference between banks, direct lenders, and independent mortgage brokers. There's a lot of confusion about the three, what they do, which one is better, and which one is the best for you as the consumer.

So we're going to go through the pros and cons of each. I will try not to be biased as I am an independent mortgage broker, sorry about that upfront.

So with banks, the pros to the bank are obviously they have a lot of locations. So it's very convenient for the consumer. You can go down to your bank, you can go and take cash out, they have a lot of various functions that you can do at that bank. That's where most people keep their money. So there's a lot of trust with the bank, simply for the fact that that's where you have your money. You would assume that if you got a mortgage with your bank, that that would be the place where you would get the best deal.

Unfortunately, that's not always the case. Also, you can be face to face with your loan advisor at the bank. So for the banks, it's usually a convenient location, there's a lot of locations at the bank, their brick and mortar, is what they're called. You can walk into your bank, and you can get cash or you can get checks, whatever the case may be.

So there's a lot of trust that's built up with banks, because of that factor. That's the place that has my money, I should get the best deal at that bank. You can also be face to face with your loan officer at the bank. You know, you don't have to call them on the phone, they're usually at that branch on any given day that you come in. So they can help you face to face with whatever type of transaction you're looking to do.

On the bad side for the bank is the same as the good side, there's a lot of locations. So it's expensive. If you have a bunch of brick-and-mortar locations that folks can walk into, that means that you're paying a lot for that location that transfers over to interest rates on the mortgage.

Also, because the banks, that's not the only thing that they do, usually they're limited in their programs. So if they have either conventional or FHA, they usually specialize in a type of loan program. Because it's really difficult to be good at all of them if that's not what you're doing full time.

The other issue with banks primarily is their speed. So a lot of banks because of how many people that they deal with on a day-to-day transaction, not only could I not set up an appointment to see my guy. Once we got the loan transaction into place, it was a very long arduous process 45-60 days, sometimes longer than that.

The direct lender, on the other hand, the direct lender is a mortgage bank that that's all they do as mortgages, so you can't do any other transactions with them. They have still some brick and mortar locations that you can walk into, but not as much as the retail banks. So that convenience dwindles just a little bit.

With the direct lenders, again, some of the bad are they’re a little bit slow. So, you know, again, with size, unfortunately, comes, you know, stress on how fast they can actually complete a purchase or a refinance transaction.

A lot of that has to do with many layers of management. And just having a lot of people handling a lot of loans, that tends to slow the process down quite a bit.

A lot of the direct lenders, they have a call center type setup, which generally consumers do not like. Maybe you get the same loan officer maybe won't, it kind of ends up being almost like a customer service representative, instead of an actual loan advisor that will help you with your loan. And a lot of consumers do not like that.

The Independent mortgage broker is the best option for the consumer. And let me tell you why. With an independent mortgage broker, they do not have just one, or two, or five lenders that they deal with. They actually shop hundreds of lenders for the consumer and find the best deal and the best interest rates for that consumer.

Now, the technology has come up to speed for brokers. So that competitive edge for the direct lenders has shifted to the mortgage broker world. And now the mortgage broker is actually the best as far as technology, speed, service, fees, everything.

The experience is another benefit of an independent mortgage broker. In order for us to get licensed, it's a much higher regulation that takes place we have to have much more experience than anyone that is in that direct lender or the retail bank facilities.

Also, unfortunately, with the independent mortgage broker, you cannot, they don't offer other services. So we only do mortgage, you can't go and get cash or get quarters or anything like that from them. So that's again, you know, they only handle one type of transaction, it's strictly mortgage. And that's truly why they're there the best for the consumer.

https://veteransnationalmortgage.com/
   • The Difference Between Banks, Direct Lende...