The Pros and Cons…

Working Directly with a Lender Versus a Mortgage Broker

When it comes to looking for commercial real estate lending options, there are two main ways to go forward:

  1. You can work directly with a lender
  2. You can use a mortgage broker

Both have their pros and cons, so it can be tough to decide which is the best option for you. In this blog post, we will break down the advantages and disadvantages of using each one so that you can make an informed decision.  We are a direct lender on some deals, and a mortgage broker on other deals, so we’ve got the facts!

A direct lender is a financial institution or private entity that can approve and finance loans in their own name.  A mortgage broker is an agent, working on your behalf, who helps you obtain the best loan for you from a variety of lenders.  

The pros of using a direct lender are:

  • You can communicate with the lender directly
  • The lender itself provides the loan
  • You can form a relationship for future deals

The cons of using a direct lender are:

  • Lenders generally don’t offer as many different products as a mortgage broker would
  • May get a less expensive loan by going through a mortgage broker
  • If your loan application is denied, they do not refer you to another lender likely to do your deal
  • If shopping several direct lenders, you will be filling out an application for each

The pros of using a mortgage broker are:

  • Have access to many different lenders, so they can find you the best deal possible
  • Help you navigate the complicated lending process
  • Can be considered a “One Stop Shop” because they can deliver a lot of loan options at once
  • Don’t cause multiple inquiries on your credit report from applying to different institutions

The cons of using a mortgage broker are:

  • May not have the same level of knowledge as a direct lender
  • Will charge a fee for their services
  • Are often paid by the total amount of the loan you choose. (This could influence a broker’s advice and research, so be careful not to be steered towards a more expensive loan)

So, which is the best option for you?

That depends on your needs and what you are looking for. If you are comfortable with the idea of dealing with directly with a lender and you have a good understanding of what they offer, then go for it. If you want more options and someone to help you through the loan process, a mortgage broker is your best bet.

Whichever way you go, make sure to do your research so that you know what to expect.

Malcolm Turner


ABOUT US:  Castle Commercial Capital is a nationwide commercial mortgage lender for real estate investors and business owners located in Southfield, Michigan. We specialize in bridge loans for FAST CLOSINGS, long-term rental loans for PERMANENT FINANCING, and SBA financing for business owners looking to grow their business.

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