Direct Mortgage Concepts

Direct mortgages allow lenders and homebuyers to negotiate directly,

Direct mortgages differ from some other mortgages because the lender works directly with the home buyer to arrange the terms of the mortgage. No middleman or broker exists between the two parties.

Examples

Well-known companies that offer direct mortgages include most major banks. Smaller local banks and government agencies may also offer direct mortgages.

Advantages

By eliminating the middleman, direct mortgages generally make loans slightly more profitable for lenders and more affordable for home buyers. Dealing directly with a bank may offer more personalized service. If it is a bank you already have an account with, they will have a better understanding of your financial situation and needs. Some banks offer unique options such as discounted, bank-owned properties seized in foreclosure.

Disadvantage

The disadvantage of a direct mortgage is decreased selection. A mortgage broker will likely offer loans from a number of sources, each with their own interest rates, loan terms and options. A bank only offers the services available through that bank.

References

• USDA: Rural Housing Direct Loans