A broker is someone who can shop multiple banks to get you the best rate or package that works for your credit score, income, and loan amount.
A direct lender is a bank or credit union—say Umpqua Bank, Evergreen Home Loans, Wells Fargo, Chase, or BECU. You get the loan directly from the bank itself.
Brokers
One thing to consider when using a broker is increased timelines. A broker like Rocket Mortgage or loanDepot might offer the best rate, but they might also have a longer turnaround time for appraisals. This can disincentivize a seller from choosing you, because you require a 30-day closing instead of a 21-day closing. Additionally, sometimes the lowest rate a broker finds might be through an out-of-state lender that must comply with different legal requirements than those of Washington State. As a result, you might need to follow atypical escrow rules, provide additional documentation, or deal with wire transfers in East Coast time instead of West Coast time. Be upfront with your broker and find out early what their particular needs are.
Direct Lenders
Direct lenders fall into two categories: (a) big banks and (b) credit unions and smaller banks. Both of types have their own benefits. Typically, the bigger banks like Wells Fargo and Chase are great for jumbo loans (greater than $647,200) and often offer better rates than smaller institutions. Those smaller banks and credit unions, though, often offer better products for smaller loans.
There’s no “right answer” to whether you should use a broker or a direct lender—it depends on your unique situation and needs.
We have a handful of lenders who we’ve worked with for years, both on the bigger bank side and the smaller bank side, and we’re always happy to put you in touch with them. Please reach out if you have any questions on lending, home-buying, or home-selling. We’re here to help and educate!
