What Are The Pros And Cons Of A Wholesale Mortgage Loan?
Most consumers assume that a mortgage loan is a mortgage loan no matter where you go to obtain it. However, there are basically two different types of mortgage loans: direct and wholesale. Direct mortgage loans come straight from a lender. For example, if you go to a bank to get a home loan, this is likely to be a direct loan. If you go to a broker to get a loan, this is going to be a wholesale loan. Check out the pros and cons of wholesale loans to get a better idea of whether this is the right option for you.
Pro: You have more opportunities to be approved for a loan.
Because you are working through multiple brokers and investors with a wholesale mortgage, you may be able to easier find a loan when you may otherwise not be able to. With a wholesale loan, the lender does make the loan terms, but in order to get the mortgage packages "sold," they often have looser lending terms than if you were working with a solely in-house operation.
Con: You will be working with a broker and not directly with the lender.
Instead of going to the lender to get the mortgage you want, the broker will actually handle your application. While this transaction can have some positives, you may find it a little frustrating that questions you have about loan terms will have to first be filtered through the broker to the lender. The lender with a wholesale loan is kind of the behind-the-scenes entity that makes all the rules, and the broker is like the frontman. This can mean some processes can be a little more time-consuming. Plus, you may be responsible for additional broker fees that you would not normally have to pay with a direct mortgage.
Pro: Wholesale loans can be easier to find if there are few lenders in your area.
If there are not a lot of lending institutions near you, it can make finding a mortgage loan a little harder. On the other hand, wholesale loans are passed down as a product to multiple brokers, so you may be more likely to find a wholesale loan broker than you would an actual lender. For some perspective homeowners, it is important for them to have someone local who they can work with to get a loan instead of having to travel to another city when they have to wade through the paperwork and processes of obtaining a mortgage.
For more information, contact a company like Carrington Wholesale.