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Why A Direct Lender is Better than a Mortgage Broker or Big Bank

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Tags: Refinancing, Home Buying & Selling

You remember Goldilocks. One chair was too small, one chair was too big, but the other was just right. That’s one way to think of mortgage companies when you’re shopping for a mortgage.

direct lender versus big bank or mortgage broker


Here’s a simple breakdown of the types of companies to consider:

Too small (mortgage brokers, non-bank lenders, small hometown banks)

  • These companies rely on a third party to underwrite the loan
    • This means your information is being sent elsewhere. It’s not staying within the company you chose
  • They also rely on other companies for rate lock protection and preparing closing packages
  • You’ll likely have to sign extra paperwork
    • You could end up with double the amount of disclosures because the investor and the broker are both sending them
  • These companies must ship your information to the other companies, which could make the process take longer
  • They’re more dependent on the turn times of the third parties
  • They may have fewer reviews because there isn’t as much volume


Too big (large national banks…you know the names)

  • Large banks do not specialize in mortgages. They do everything
  • You’ll likely be cross-sold a lot of other financial products
    • That means you could receive junk mail for credit cards, checking accounts, etc.
  • They’ll have higher interest rates because there’s more overhead
    • These companies need money to pay for several other expenses, including SuperBowl ads, signage, offices, etc.
  • Banks have been hit with a lot of fines for violations
  • When you call, you’ll likely have to listen to recorded menus before you’re put in touch with a real person
  • Most big banks have been bailed out at some point


Just right (direct-to-consumer, independently owned mortgage lenders like Wyndham Capital)

  • Every part of the mortgage process is done in-house
    • This means loan processing, underwriting, closing, and funding is done in the same building
  • High customer-service ratings
  • Wyndham Capital survived the 2008 market crash and was never bailed out
    • It’s been in business for more than 16 years
  • Very competitive internet pricing interest rates
  • You’ll speak to a live person when you call


If you’re still shopping for a mortgage, here are other things to consider when deciding which mortgage company to choose.