Why Working with a Local Mortgage Lender is Better (2024)

FAQs

What are the benefits of working with a local lender? ›

You'll get more personalized service.

They'll be invested in helping you find the right home and getting you the best loan possible. In addition, having a face-to-face relationship with the lender provides the comfort of dealing with someone you know and trust to guide you through the home buying journey.

Local lenders provide a more personalized experience.

Your lender will review your financial information and will provide the best loan solution for your homeownership goals. With other mortgage lenders, you may deal with service lines, no direct contact, and delayed service.

Because, at the end of the day, a local Mortgage Broker can help you make intelligent decisions with information you may not be able to obtain elsewhere. Understanding local trends is particularly important for investment property loans, where the investment loan application process is just the beginning.

A mortgage broker is offered loans on a wholesale basis from lenders, and therefore can offer the best rates available in the market, typically making the total loan cost lower for the client. A reputable mortgage broker will disclose how they are paid for their services, as well as detail the total costs for the loan.

Local lenders have the flexibility to craft mortgage solutions tailored to individual needs. Whether you have unusual financial circ*mstances or specific requirements, a local lender can often provide more customized lending options than their national counterparts.

Public buildings, roads, and bridges are used for decades but entail large upfront costs; borrowing enables the state to spread out those costs. As a result, taxpayers who will use the infrastructure in the future help pay for it, which promotes intergenerational equity.

The loan process for a private loan is often faster, with no income verification, and the terms are more flexible, allowing borrowers to seize timely investment opportunities. However, these advantages come with a cost — private loans usually carry higher interest rates than bank mortgages.

Comparing rates and terms from different mortgage lenders — banks, credit unions and online lenders — is key to finding the best deal. While shopping around (preferably with at least three lenders), be sure to compare the following: Loan terms (loan amount, interest rate, annual percentage rate, etc.)

Local expertise

Besides knowing the area and local real estate market, a local lender will appear more attractive to certain home sellers and real estate agents because of the importance of a timely closing and a smooth process.

The following are disadvantages you might encounter when you hire a mortgage broker: It does not promise the best deal. While they can help you find the most favorable rates, working with a mortgage broker does not guarantee the best deal. It also does not mean you will secure the most affordable rate.

How do you know if a mortgage broker is good? ›

The Bottom Line. While a mortgage broker is a one-stop shop for multiple options, their fees come from the lender, so it may be possible for well-qualified buyers to get better rates and fees by cutting out the middleman.

Free: You won't pay a dime to your mortgage broker when you use their services. Instead, they are compensated by the lender. Better rates: Most mortgage brokers receive volume discounts from their top lenders, which means you'll have access to lower mortgage rates than you could secure if you try to negotiate yourself.

a Bank. A mortgage broker can offer a wider array of options and streamline the mortgage process, but working directly with a bank gives you more control and costs less. Kate Wood joined NerdWallet in 2019 as a writer on the homes and mortgages team.

A good broker works with you to: Understand your needs and goals. Work out what you can afford to borrow. Find options to suit your situation.

The benefits of being a lender include earning interest on the loaned amount, while the risks include the possibility of default by the borrower. The benefits of being a lender include generating income, while the risks include credit risk, which is the most significant risk for credit institutions.

Direct lenders handle the entire process from start to finish. Your application is received, evaluated, and approved by the same company that provides the loan. As a borrower, you benefit from faster approval times and quicker access to your funds.

Private individual lenders are generally more willing to work with people with a lower credit score or more difficult lending situation. They do this in exchange for a higher interest rate and they have a higher rate of acceptance on the loan as well.