Before you begin the process of finding and ultimately signing a home loan agreement with any direct lenders for loans with bad credit there are a few things you should be aware of.

The first problem people often have is not understanding the basic difference between a direct lender and a mortgage broker. A direct lender is essentially just a term that a lot of the smaller lenders out there use to set themselves apart from mortgage brokers.

A mortgage broker is not actually a lender but rather an independent agent who offers a number of different mortgage products. In other words, a mortgage broker is a mortgage wholesaler while a direct lender is actually the one who will give you the money. It’s important that people understand the difference before seeking out direct lenders for loans with bad credit.

It is commonly believed that a direct lender is the best, or even the only way to get a loan if you have a bad credit score. This is sometimes true but it is by no means an absolute rule. While a direct lender can sometimes offer the best interest rate because of the absence of a middle man, a mortgage broker can sometimes offer the best rate because of the larger number of options they have at hand.

So ultimately it is recommended that you try both angles. I would first get a round of quotes from direct lenders for loans with bad credit and then follow it up wit a round of quotes from mortgage brokers. It can take a little bit of time but in the end it’s worth it. The right mortgage interest rate can mean thousands of dollars in savings over time.

By: John H. Drake

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