Hard Money: Should You Work With A Broker Or A Direct Lender?
Wednesday, October 11, 2006
You’ve decided you need a hard money loan. Should you approach a direct lender or use the help of a broker? Here are some points to consider about both options.
The Direct Lender Approach
It’s obvious what the advantages are in working directly with a direct private lender. You save money by eliminating the middleman. Brokers are paid from a percentage of the points you pay on a hard money loan. Ergo, the more brokers involved, the more you will pay in points and percentage to cover the cost.
If your hard money lender is a good match for you, you can speak directly to the right people and avoid any noisome runarounds. And be aware that, more often than we would wish, a broker’s choice of your direct lender will be based on the commission he plans to get, rather than on your best interests. By working directly, you can close more quickly, because no one can explain your situation better than you can, and obviously no one is as committed to your business and your loan as yourself.
The Broker Approach
There are also definite advantages to working with a broker. An honest, experienced broker has knowledge of and access to the top direct hard money lenders in the country, and knows where you loan will fit the best.
He can help you ‘package’ your loan in the best possible way, sharing information with you that can help decide how much to expect based on the equity in your property, how fast you need to close, and more. A top-notch broker can also help you with the complex application process and float it to what he feels are the best direct lenders for your situation.
Ultimately, you’ll have to decide: broker or direct access to a private lender. There are advantages to both.
The Direct Lender Approach
It’s obvious what the advantages are in working directly with a direct private lender. You save money by eliminating the middleman. Brokers are paid from a percentage of the points you pay on a hard money loan. Ergo, the more brokers involved, the more you will pay in points and percentage to cover the cost.
If your hard money lender is a good match for you, you can speak directly to the right people and avoid any noisome runarounds. And be aware that, more often than we would wish, a broker’s choice of your direct lender will be based on the commission he plans to get, rather than on your best interests. By working directly, you can close more quickly, because no one can explain your situation better than you can, and obviously no one is as committed to your business and your loan as yourself.
The Broker Approach
There are also definite advantages to working with a broker. An honest, experienced broker has knowledge of and access to the top direct hard money lenders in the country, and knows where you loan will fit the best.
He can help you ‘package’ your loan in the best possible way, sharing information with you that can help decide how much to expect based on the equity in your property, how fast you need to close, and more. A top-notch broker can also help you with the complex application process and float it to what he feels are the best direct lenders for your situation.
Ultimately, you’ll have to decide: broker or direct access to a private lender. There are advantages to both.
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