​Do you know the difference between a loan broker and a direct lender?

2 Replies

A direct lender funds loans. A loan broker finds direct lenders to fund loans. When an investor submits a loan to a “lender” the investor doesn’t realize this “lender” is really a loan broker.

When working with a loan broker, find out exactly how the loan broker will place your loan. You might ask questions such as “Does the loan broker have an established relationship with a hard money direct lender?” or “If the loan broker doesn’t have any relationships how will he or she go about finding a direct lender for my loan request?”

The key for the borrower is to understand the difference between the direct lender and loan broker. The borrower needs to know exactly who he or she is working with. Some loan brokers will “shotgun” the borrower’s loan out to anyone and everyone online in an effort to find a direct lender to fund the loan.

Do you have hard money loan questions or tips? 

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