Why Use a Mortgage Lender Instead of Your Local Bank? (2024)

As you start your homebuying journey, one of the most important decisions you’ll make is where to source your mortgage.

Should you use a mortgage lender or a traditional bank?

While both options take you to the same destination, there are differences in the paths that get you there.

Let’s take a closer look at why partnering with a mortgage lender is often the easiest and most direct route to homeownership.

What’s the Difference Between a Mortgage Lender and a Bank?

Although your local bank may be able to offer mortgages, it also provides a variety of other financial services.

A mortgage lender, on the other hand, is solely focused on providing financing for real estate purchases.

Mortgage lenders have the authority to approve and fund your home loan, as well as to coordinate all of the steps associated with getting a mortgage—from processing your application to finalizing your closing paperwork.

When you begin shopping for a mortgage, be careful not to confuse mortgage lenders with mortgage brokers, as they provide very different services.

A mortgage lender makes loans directly to you; a mortgage broker doesn’t lend money at all, but they can find you a lender that will.

The Benefits of Getting a Home Loan through a Mortgage Lender Instead of Your Local Bank

Mortgage lenders are only in the business of lending money for real estate purchases. This provides their customers with several advantages they won’t get working with a bank:

Expertise

Loan originators at mortgage lending companies are required to undergo extensive training and pass licensing examinations that demonstrate their business knowledge and understanding of compliance and consumer protection laws.

Bank lenders are not required to have any mortgage-specific training or knowledge.

Flexibility

Mortgage lenders have access to a huge range of mortgage options, including conventional, ARM, FHA, VA, USDA, and refinancing loans. Because mortgage lenders make loans directly, they are able to offer more flexible eligibility requirements.

Local banks often have fewer mortgage options and much more stringent lending guidelines than mortgage lenders.

Efficiency

Mortgage lenders process, approve, and fund mortgages in-house, which helps streamline the application process and accelerate time to closing. For example, First Federal Bank Mortgage Lenders let you complete your application in minutes on your cellphone or easy-to-use website.

Mortgages are just one line of business at your local bank, which adds friction that makes the application and underwriting processes take longer.

Are There Drawbacks to Using a Mortgage Lender Instead of a Bank?

Although there are very clear benefits to working with a mortgage lender to finance your home purchase, there are a few scenarios that may make borrowers decide to work with a bank instead.

For example, if it’s important for you to have all of your financial assets in one place, obtaining a mortgage through a bank might be a better option than using a mortgage lender.

Your bank may offer customer-loyalty incentives like special rates and mortgage programs for existing account holders. However, this is a great example of why you should comparison shop for a mortgage.

With the extensive range of products and flexibility mortgage lenders are able to provide, you are likely to get the same benefits your bank offers—if not better—from a mortgage lender.

Have Questions? Speak with an Experienced Mortgage Lender

A mortgage is a big commitment, so it’s important to make sure you have all the facts before you decide whether a mortgage lender or a bank is the best fit for your home loan needs.

Our highly experienced mortgage lenders are always happy to answer any questions, walk you through the process, or discuss which mortgage options are right for you.

Click below and someone from our team will be in touch.