Search for a land loan and you will find dozens of lenders. Many of them are not lenders. They take your application and shop it to someone who is.
That is not always bad. But you should know which one you are talking to before you sign anything or pay anything.
What is the difference between a direct lender and a broker?
A direct lender funds the loan with its own money and makes the decision. A broker finds a lender for you and is paid for the match.
| Direct lender | Broker | |
|---|---|---|
| Whose money | Its own | Someone else's |
| Who decides | The lender, in house | The lender the broker picks |
| Speed | One step | Two steps |
| Cost | The lender's fees | The lender's fees plus the broker's fee |
| Best for | Deals that fit the lender's program | Unusual deals that need shopping |
Need to close fast?
$30K to $1M, 20% down, no appraisal, no points at closing, close in about 7 days. Written quote in 24 hours.
Get a Free QuoteApply NowIs it bad to use a broker for a land loan?
No. A good broker can find a lender for a deal that does not fit the usual boxes. You just pay for it and add a step.
Brokers earn their fee when your deal is unusual: a big loan, a hard state, or a property most lenders will not touch. We accept loans from brokers too; our application has a place for a broker applying for a client. The problems start when a broker acts like the lender, quotes terms the real lender never agreed to, or charges fees before anything is in writing.
How can you tell if you are talking to a direct lender?
Ask whose money funds the loan, whose name goes on the note, and who signs the commitment.
- "Whose money funds this loan?" A direct lender says its own.
- "Whose name will be on my note and deed of trust?" It should be the company you are talking to.
- "Who makes the final decision?" A direct lender decides in house.
- "Can you show me loans you funded?" Real case studies or references.
- "What fees do I pay, and when?" In writing, before you pay anything.
What does a broker cost you on a land loan?
A broker fee on top of the lender's costs, and often more time.
Broker fees are often a percentage of the loan, paid at closing, on top of whatever the lender charges. Add both together when you compare offers. See hidden costs of private land loans and run the lender side on the land loan calculator.
What are the red flags?
Large fees before written terms, a quote with no lender name on it, and pressure to sign fast.
- An "application fee" or "commitment fee" before you see terms in writing.
- Terms that change once the real lender sees the deal.
- No lender name on the term sheet.
- No closed loans to show.
Takeaway: get the lender's name and the terms in writing before any money moves. More on judging a lender in our land loan lenders comparison.
Frequently Asked Questions
Is Damen Capital a direct lender?
Yes. Damen Capital funds land loans from its own capital and makes every decision in house. We also accept loans submitted by brokers for their clients.
Should I use a mortgage broker for a land loan?
A broker can help with an unusual deal, but you pay a broker fee on top of the lender's costs and add a step. If your deal fits a direct lender's program, go direct.
How do I know if a land lender is a broker?
Ask whose money funds the loan, whose name goes on the note, and who signs the commitment. If the answer is another company, you are working with a broker.
What fees should I never pay before written terms?
Large application, processing, or commitment fees. Get the lender name and the full terms in writing first.