FHA Mortgage Broker or Direct Lender?
The question of whether to use an FHA direct lender or FHA mortgage broker is common among people seeking an FHA mortgage. Whether you decide to use an FHA mortgage broker or FHA direct lender will depend on an array of factors but your ultimate decision should be based on which company (FHA lender or broker) is giving you the best deal.
What is an FHA mortgage broker?
An FHA mortgage broker is a company who is licensed by the Federal Housing Administration to make an application for an FHA mortgage but does not actually loan money. A mortgage broker may act as a "middle person" between a mortgage applicant and the FHA lender. The responsibilities of a mortgage broker can include: performing a credit check, determining if the FHA applicant is qualified for an FHA loan, ordering home appraisal and handling the load of paperwork involved in the processing of an FHA mortgage application.
What is an FHA direct lender
An FHA direct lender is an FHA insured lending institution that is authorized to loan mortgage money. When applying for an FHA mortgage with a direct lender you are dealing directly with the institution that is loaning you the money.
Benefits of using an FHA mortgage broker
- An FHA mortgage broker is not limited to a single set of qualifying guidelines and can "shop around" your FHA application to different FHA lenders, qualifying you for the best deal available
- A mortgage broker may be able to close your loan faster than a direct lender
- You may qualify for a lower rate with an FHA mortgage broker
Benefits of using an FHA direct lender
- Your closing costs may be lower with a direct FHA lender
- You are dealing directly with the institution loaning you the money
An FHA mortgage broker has the ability to shop around, making banks compete for your loan which can result in a greater chance of qualifying for your FHA loan at a lower rate. On the other hand, and FHA direct lender may offer a great rate too with less closing costs and no middle man.