The internet has made many aspects of home buying easier, people now have many more options and choices when house hunting and going through the closing process. Some buyers feel that going with a smaller lender for their home loan is to their benefit, but in this arena, the big guys still have the edge.
A new report from Fitch Ratings finds large banks have access to more competitive pricing, along with the ability to link online mortgages with other bank products, giving them a market advantage in developing this segment over time. Banks also have larger budgets and more resources to give them a competitive leg-up in the market. In addition, large banks tend to have more IT staff dedicated to cyber-security, so online mortgage data is more protected from fraud and identity theft.
That said, some large non-bank players have also begun to gain traction in the mortgage world. Quicken Loans launched Rocket Mortgage in 2016 to great success, and have been credited with making other lenders play catch up in terms of ease-of-use and streamlining the online mortgage process. “Digital technology is reshaping the mortgage industry and is rapidly influencing how consumers make purchases today,” said Mike Weinbach, CEO of Chase Mortgage, at the time. “This platform will allow us to be where more of our customers are, which is online and on their phones, while still offering the option to work with us in person if they prefer.”
So, given all of these benefits, why would anyone choose a smaller local lender? Well, the big companies do have some downsides. The bigger the bank, the more business they do, which means you're just one of thousands. They are less likely to bend over backwards to work with you or hold your hand throughout the process. “If you go to the big guys, you’re client No. 1,049—they don’t really know you,” says Bruce Ailion, broker and real estate expert with Re/Max Town and Country in Atlanta.The upshot is you may not have one specific loan officer who works with you and gets to know you as a person. This is okay, provided your loan needs and borrowing profile are fairly low-maintenance.
However, the small local lender really wants your business. They want you to feel that you are treated as an individual and a valued customer, so you will tell your friends and neighbors about your positive experience. This means they will usually take more time to walk you through the process, and help you with the extra paperwork you are self-employed for example, or work with you to build your rating over time if you have a lower credit score. You will generally have just one loan officer who will work with you and customize your experience to suit you.
Ultimately, your choice really depends on what kind of borrower you are, and what your needs and preferences are as a customer. Do you want round-the-clock access to a 800 number in case you have a question keeping you up? Then a national lender might be a better fit. If you want more personalized service where everyone knows your name, or if you have a non-traditional income, then a local lender might be the answer. Consider it from both angles before you make up your mind.
At Setco we work with lenders large and small to meet your title and closing needs. We have local offices throughout the Panhandle with title professionals who live and work in the same communities you are buying your home in. Please click below to view our lender tools and resources page to see what processes we have implemented to help our clients. And feel free to contact us directly if you are a lender or a homebuyer to see how we can work together to make everyone’s journey to home ownership a little easier.