Local bank vs. National bank for Mortgage
I'm trying to check a rationale I'm hearing about Seattle real estate against some uninterested parties.
When I'm doing mortgage rate shopping I'm generally seeing much more competitive rates from national and online banks. Local banks have generally been higher. All else being equal, seems like a no brainer to go with national/online.
Yet when I speak to agents or local banks, they claim that sellers will always take a local bank first, and that our bid will be at the bottom of the stack. They mention things about faster closing and that seller agents have developed relationships and trust with local banks.
Is this in fact the case? It seems plausible, but curious how strong this preference is and if in fact we'd have practically no chance with a national/online bank.
When I'm doing mortgage rate shopping I'm generally seeing much more competitive rates from national and online banks. Local banks have generally been higher. All else being equal, seems like a no brainer to go with national/online.
Yet when I speak to agents or local banks, they claim that sellers will always take a local bank first, and that our bid will be at the bottom of the stack. They mention things about faster closing and that seller agents have developed relationships and trust with local banks.
Is this in fact the case? It seems plausible, but curious how strong this preference is and if in fact we'd have practically no chance with a national/online bank.
Comments
As someone who has sold a handful of homes in the Seattle area what I can tell you is that I strongly prefer local BROKERS over any bank but specifically avoid large national bank prequal/preapproval letters as I have found that they are much less likely to perform than others. Just one dummie's opinion though.
Bottom line, if something goes wrong, the seller, real estate agents and of course, the buyer (at that point) may find themselves in a better position working with someone who has a local reputation to uphold.
I've heard from many lender's that everybody get's their money from the same people or entities and the rates end up being the same in the end.
Terms/Rate: The online companies (quicken, rocket, etc) promote the lowest rate but they don't always have all of the needed information on the subject property to actually give you a rate. The rates seem to be the same or similar to what you would get from a bank. The independent mortgage companies (Evergreen, Academy, Fairway, etc) normally start out a bit higher in rates but the lender has the ability to drop the rate to make it more competitive. The banks tend to offer more programs (1st time home buyer programs, 0% down, etc) so it's a good idea to start with a bank to see if you might qualify for one of these. It's also a good idea to get pre-qualified by 2-3 different companies to make sure you are getting the best deal. If you get pre-qualifed by 2-3 companies at the same it time, it won't have any more effect on your credit than if you just went to one company. And make sure to use one of the lender's your agent recommends because they have relationships with companies that will make sure you get taken care of.
Competitive: This includes time to close, personal touch, and familiarity with the listing agent. The thing to remember is that listing agents/sellers are looking for the least risky offer that has the highest likelihood to close in the shortest amount of time. Independent lenders, on average, can close the transaction in a shorter time than banks. I've seen academy close a conventional loan in less than 14 days! This can give your offer a leg up on the competition if the other offers are closing two weeks later. For better or worse, online companies have a bad stigma with real estate agents because they don't see these loans very often. Since agents don't see them very often, they associate a high level of risk with going with one of these offers. Final piece is the personal touch and familiarity. Many agents are old school and like to work with local lenders, that have an office in this area. Many times, these agents have worked with the lender or company and have a high level of trust that the lender will do what it takes to close. The local companies also know the real estate market and can add value in what it took for previous offers to get accepted.
None of this is fact, it's just info I've gathered from lenders over the years