When looking for the right home, you likely have a list of must-haves or nice-to-haves. When shopping for the right Mortgage lenderYour preferences also play a role. While lenders can provide the same end product, not all are created alike. Depending on your needs, you can partner with either a large lender, a local lender, or another type.
Where can you get a mortgage?
The first is the first: let’s talk about where to get a mortgage. The different types of mortgage lenders include:
- Big banks – One of the most common places to get a mortgage loan is from large banking lenders. These are well-known brands that are typically available nationwide – think chase or Capital One.
- Local banks – Many municipal and regional banks also offer mortgages, but these can sometimes be limited to a specific service area.
- Affiliated Mortgage Lenders – Some mortgage lenders are associated with a bank but have a different name. PrimeLending, for example, is a subsidiary of PlainsCapital Bank’s mortgage lender.
- Credit unions – In some cases, credit unions can offer fewer fees and lower interest rates than big banks.
- Independent mortgage lenders – An independent mortgage company is not affiliated with a bank. One example is the Fairway Independent Mortgage Corporation.
- Online lender – Online mortgage lenders do not have extensive overheads, which often translates into cheaper loans. An example of an online lender is this Better.com.
Big banks and national lenders: pros and cons
Large banks and national mortgage lenders can come with a certain sense of security, especially if you’ve heard the name or see branches all over the place. For example, if you need help determining what type of mortgage you have, it might be helpful to go to a local branch to speak to someone in person.
In addition, large banks usually have extensive customer service hours. If you are faced with an urgent problem regarding your loan after business hours, you can likely reach someone by phone or online chat.
Large banks and national lenders often also offer a streamlined online application experience. Once these are approved, you will likely be able to manage your loan payments entirely online.
However, getting bigger isn’t always better. While large banks are convenient and familiar, you are likely to find yourself among thousands of other borrowers. With that, you might not find the experience as personalized as you’d like or an obvious willingness to help you with the process.
Being there: advantages and disadvantages
On the flip side, a local mortgage lender can take a more personal approach as most loan officers with local lenders live in the community they work in.
Your loan officer may also have fewer clients to keep up with. If you have a more complicated loan, it may work in your favor as it will give you easier access to questions.
However, one possible disadvantage of working with a local lender is that you may have to spend some time sorting and reviewing your options rather than simply working with your existing bank.
What about credit unions?
However, with a credit union, you may only have access to a limited number of loan products, which means you may not find exactly what you are looking for. You must also qualify for membership. However, this member-centric experience could add more case-by-case flexibility to help you with your mortgage needs.
Are Online Lenders Better?
With an online mortgage lender, you can go through the loan application process quickly, usually with a fully (or almost entirely) digital experience. This can be particularly valuable today when personal contact is minimized. They are also worth considering if you want to take advantage of lower rates.
Convenience, cost, and speed are important, but at some point you may also need human interaction. Without branches, this can be difficult to achieve with an online lender.
How to Find the Best Mortgage Lender
When looking for the best mortgage lender – either a large bank, local lender, or some other type – the cost is important, but so are your needs and preferences. Here are a few options Narrow your options::
- Look at your credit. If your credit score could be improved, look for lenders that have Options for low credit borrowers. They usually have more experience in qualifying people who do not fit the standard profile of the borrower.
- Compare quotes from multiple lenders. Studies show that shopping for a mortgage could save you thousands. Do not skip this step!
- See how lenders communicate with you. When looking for pre-approvals from various lenders, be careful how they communicate with you. The right lender shouldn’t be difficult to work with and they should be able to answer your questions promptly and keep you informed throughout the process. The right lender will never pressure you with a tough pitch either.
- Weigh up the lender fees. Many lenders charge an origination fee, and some also charge an application fee. Keep this in mind when comparing your options. Watch out for fees that seem high – this can be a sign that you are not getting the best deal.