Direct lender or broker? Ask who makes the decision.
A direct lender decides on your loan and funds it with its own money. A broker takes your deal to lenders and is paid for placing it. Neither is wrong. But on an investment property, where the closing date and the draws make or lose the deal, it matters whether the person you are talking to is the one who decides.
Direct lender and broker, side by side.
| Term | Direct lenderLends its own money | BrokerPlaces your loan |
|---|---|---|
| Who decidesYes or no, and on what terms. | The people you are talking to | A lender the broker brings the deal to |
| Who fundsWhose money closes the loan. | The lender itself | That other lender |
| What it costsBeyond the lender’s own rate and points. | Nothing in the middle | The broker’s fee, paid by you or built into the loan |
| Questions and changesA new closing date, a revised budget. | Answered by the decision-maker | Passed along and back |
| Draws on a renovationAfter closing. | Funded by the lender. Ours: in-house, in minutes | Handled by the lender, not the broker |
| If your deal does not fitAn unusual property or borrower. | The lender says no, or sends you elsewhere | The broker tries another lender |
| ChoiceHow many offers you see. | One lender’s programs | Several lenders’ programs |
A good broker earns the fee when a deal fits no single lender. On a deal a lender does every day, you can go straight to the lender.
When each one is the better choice.
| Term | Better choicethe answer | Whythe reason |
|---|---|---|
| A flip, a rental or a build a lender does every dayA standard deal. | Direct lender | The terms are the lender’s either way; skip the fee and the delay |
| A closing date that cannot moveA contract with a deadline. | Direct lender | One team decides and funds; nothing waits on a third party |
| A renovation with drawsMoney released as you build. | Direct lender that runs its own draws | You will deal with whoever funds them for the whole project |
| A deal that fits no lender’s boxAn unusual property, credit or structure. | Broker | Knowing which lender takes the exception is what a broker is for |
| You want several lenders’ quotes without calling eachShopping. | Broker | One application reaches several lenders |
Brokers bring us deals too, and we work with them. If you can reach the lender yourself, you can go direct.
How to tell if a lender is really direct.
Whose money funds it?
Ask plainly: do you fund this loan yourselves, or place it with someone?
Whose name is on the terms?
The lender named on the term sheet and the closing documents is the lender.
Who pays the draws?
On a renovation, ask who inspects and funds them, and how fast.
What is the NMLS number?
Look the company up on NMLS Consumer Access. Ours is in the footer of every page.
Direct lender and broker questions
What is a direct lender?
A lender that underwrites, closes and funds a loan itself. The people who price your loan are the ones who decide on it.
What does a loan broker do?
A broker takes your deal to lenders and is paid for placing it, by a fee you pay, a fee the lender pays, or both. A broker does not fund the loan.
Is it better to use a broker or a direct lender?
For a standard investment deal, a direct lender: the same terms without a fee in the middle. For a deal that fits no single lender, a broker’s knowledge of who takes exceptions is worth paying for.
Does a broker cost more?
A broker is paid for the placement, so there is a cost: either a fee you see or one built into the rate and points. Ask for it in writing before you apply.
Is a direct lender faster?
Usually. There is one team between you and the money, and changes are answered by the people who decide.
Are you a direct lender or a broker?
A direct lender. We price, close and fund our loans and their draws ourselves. How our loans work.
What is a hard money broker?
Someone who places short-term investor loans with hard money lenders for a fee. See hard money vs private money for who the lenders are.
I am a broker. Do you work with brokers?
Yes. Call the office and we will set you up.
Stop paying the middleman. Go direct.
Send us the deal: the property, the price and your timeline. The people who answer are the ones who decide.
*For business-purpose loans on non-owner-occupied investment property only. Not available for personal, family or household purposes. All loans subject to credit approval, underwriting and property eligibility. Rates, leverage and terms are indicative, change without notice, and not all borrowers will qualify; not a commitment to lend. YS Capital Group · NMLS ID 2609746 · Equal Housing Lender.