When it comes to buying a house and obtaining a mortgage, individuals often face the dilemma of choosing between local lenders and big-box banks. Buying a house is not always an easy transaction due to the mortgage process being more complex than people think. If it’s your first time buying a home, you want to make sure you have a stress-free experience and that whoever you work with makes the process as seamless as can be.
A good chunk of your homebuying experience is dependent on who you choose: a local lender or a big box bank. Knowing this, we recommend going with the option that best aligns with your expectations and goals. While both options have their advantages and drawbacks, understanding the differences between them is crucial for making an informed decision. Fortunately, RWM Home Loans encompasses the best of both worlds, allowing them to serve several communities with various financial characteristics.
Are you excited to start the mortgage process? Then let’s explore the key characteristics of local lenders and big box banks so you can decide which option may make sense for your financial needs.
Why Does It Matter Who I Choose?
Trusting the biggest purchase of your life in someone’s hands is an important decision. You may be wondering, “They’re all the same, so why does it matter to me?” Well, you may want to rethink that question because who you choose will be a significant factor in your overall homebuying journey. Think about the contrasting experiences between visiting a fast-food chain vs. a local restaurant.
Fast-food chains will usually rush you through your meal without a second glance. You’re just another face in the crowd, another number. However, they may excel in other areas such as a simple food menu. Now, compare that to the warm ambiance of a cozy local restaurant, where the staff treats you like family. They anticipate your needs, cater to your preferences, and create an unforgettable experience focused on quality.
The same goes for choosing the financial lender who will help finance your home. We all want the common goal of a satisfactory experience, but we may value aspects differently. While it may seem that there is not much of a difference who you decide to work with, it may actually be the most important choice in your home buying journey.
What Do You Value in Your Home Buying Experience?
Deciding between local lenders and big box banks ultimately depends on your specific financial goals and preferences. Some may enjoy big box banks because of their convenience and others may choose local lenders for a better customer experience and efficient process. If you’re having trouble thinking about what you value in financial purchases like these, here are some factors to consider:
- Relationship Importance: Do you want a loan officer for life? If personalized service and building a relationship with your mortgage lender are important to you, a local lender may be the better choice.
- Accessibility and Convenience: Do you value convenience? Although technology has made this less important, big box banks have an extensive branch and ATM network. Some people may value having all financial accounts and loans with one bank.
- Specialized Services: Do you have a unique, non-traditional financial situation, such as being self-employed? While big box banks may offer basic mortgage solutions, local lenders tend to have a wider range of mortgage products that meet unique client needs.
- Flexibility and Local Expertise: Do you value flexibility when it comes to your loan terms and conditions? Local lenders may be better suited if you seek more flexibility in loan approval or require specialized knowledge of your local community.
- Hours and Communication: Do you need around-the-clock support? Big box banks are typically open 9-5 while a local lender or local mortgage loan officer is often willing to work around your schedule. At RWM Home Loans, many of our loan officers take their clients’ calls on the weekends and weeknights because that’s when their clients are available and off work.
Knowing what you value in your home buying experience will make it easier to decide who to work with.
Pros and Cons of Working with a Local Lender
Local lenders, such as community mortgage companies or mortgage brokers, are institutions deeply rooted in the communities they serve. While they are often smaller in scale, this can work to your advantage in several ways.
Pros
Personalized Service: Local lenders often prioritize building strong relationships with their customers. They can provide more personalized service by understanding your unique financial situation and tailoring loan options to meet your needs. In addition, mortgages are often their only financial product, allowing them to be specialists in home financing.
Local Market Knowledge: Local lenders have in-depth knowledge of the local real estate market, economic conditions, and lending solutions. They can offer valuable insights and guidance specific to your area, helping you make informed decisions. This may also include local down payment assistance programs to combat affordability for many buyers.
Efficient Communication Most local lenders can also communicate when the client is available rather than only during set hours.
Flexibility: Local lenders may have more flexibility in their lending criteria and the ability to think outside the box. They can consider unique factors or circumstances that larger, big box banks might overlook, allowing for more creative financing options.
Cons
Limited Product Options: If you have specialized financing needs or require specific loan programs, try speaking with a local lender to see what they offer before moving on to big box banks. RWM is proud to offer a wide variety of competitive loan products that meet our clients’ needs and are comparable to what big-box banks offer nationwide.
Limited Resources: Local lenders might have limited resources compared to larger financial institutions depending on their company size and business structure. Some local lenders do have these resources, such as RWM Home Loans, which has a convenient mobile app to streamline the application process and allow you to track your loan status on the go.
Accessibility: If you require banking services beyond your mortgage, working with a local lender may be less convenient as most only offer mortgages.
Pros and Cons of Working with Big Box Banks
Big box banks are corporate and well-known financial institutions with a wide range of financial services. While they may lack the personal touch of local lenders, here are some things to consider that may impact your decision when choosing a mortgage lender.
Pros
Bank Products: Big box banks may be able to lend their own money from deposits, such as a home equity line of credit (HELOC) or second mortgage. As we have mentioned some local lenders may also offer similar products, if not more loan options, than big box banks.
Convenience: If you already have an account with a big box bank, it may feel easier to connect with a loan officer and start the mortgage process since they will likely already have your bank account information.
Established Reputation History: Larger banks often have a long history of serving customers. This can provide a sense of stability and confidence when working with them, especially for individuals who prioritize a well-known brand.
Cons
Less Personalized Service. Due to their large customer base and high volume of transactions, big box banks may provide less personalized service compared to local lenders. It can be challenging to develop a personal relationship with loan officers at these banks, and the process may feel more transactional.
Slower Response Times: The bureaucracy and size of big box banks can sometimes lead to slower response times. Assistance outside of 9am – 5pm working hours and weekends may be limited or non-existent. Loan applications and approvals may take longer due to the multiple, complex processes involved.
Stringent Requirements: Big box banks often have stricter eligibility criteria, particularly when it comes to credit scores, debt-to-income ratios, and down payment requirements. This can make it more challenging for some borrowers to qualify for a loan.
Limited Flexibility: Larger banks may have less flexibility when it comes to unique or non-traditional financing needs. They tend to follow standardized processes and have less room for negotiation or creative solutions compared to smaller lenders.
Lack of Local Market Expertise: While big box banks have extensive resources and expertise, they may lack in-depth knowledge of specific local real estate markets. This can be a disadvantage if you are looking for localized insights or if the local market conditions are unique.
How Do You Get the Advantages of a Big Box Bank and a Local Lender?
RWM Home Loans offers the best of both worlds to our clients. We are a local lender with big bank offerings.
Our vast mortgage options include down payment assistance programs, low down payment mortgages, first-time home buyers, VA loans, FHA loans, self-employed programs, and much more.
In business since 1994, our focus has been on personal relationships and being your go-to mortgage advisor for life. Whether you need support after business hours or over the weekend, your dedicated mortgage advisor is there for you. We take our 5-star reputation seriously and we are here to help make sure you have a smooth and efficient mortgage experience.
Our best-in-class technology will allow you to seamlessly manage your mortgage processes, digitally sign documents, and track each step in real time. Whether you prefer our mobile app, using a computer, or meeting with us in person, we have you covered.
Looking for a competitive interest rate to reduce your monthly mortgage costs? Check out our several ways to get a lower interest rate on a mortgage to ease your homebuying experience.
