You’re ready to dive into the housing market. You have a good idea of what you’re looking for and where. You can’t wait to find that dream home. Even at this early stage, being financially prepared with a pre-approval letter is essential if you’re buying in a highly competitive market.
You might be wondering whether to go with a well-known national mortgage lender or opt for a local option. While it's true both have their pros and cons, working with a local mortgage lender could be your best move.
Going local offers advantages that can make your home-buying journey a lot smoother and more personalized than tapping the market heavyweight. Here are six reasons why.
1. Local Market Knowledge
Local lenders have in-depth knowledge of their real estate market and its specific trends, regulations, property and transfer taxes, and closing procedures.
For example, in the eastern part of Suffolk County, buyers are (typically) obliged to pay a two percent transfer tax to fund land conservation efforts. However, there are exemption thresholds that vary by amount and location.
New York state’s Real Estate Transfer Tax Law (aka the Mansion Law) is another example. Broadly speaking, this requires a buyer to pay taxes on property transactions of $1 million or more.
Local expertise in navigating these and related requirements, along with conventional practices across varying market conditions, can provide invaluable guidance for a potential buyer.
2. Personalized Service
Local lenders can provide more personalized attention and customer service than your average national lender that optimizes for quantity over quality. A local lender will take the time to better understand your specific financial situation and needs, offering tailored advice and support throughout the home-buying process.
Take this example: Let’s say you’re self-employed. Unlike traditional wage earners who can provide proof of income through W-2 forms and pay stubs, you'll need to provide different data, and there’ll be more for a mortgage lender to do. To verify your earnings history and stability, a lender might have to calculate average income over the period using tax returns, bank statements, and profit and loss statements. Relatedly, the underwriting process may be more comprehensive than for a W-2 borrower.
All of this takes more time and expertise, which a national mortgage lender may be less inclined to provide. A local lender is focused on building and maintaining a favorable reputation among community members and, as such, may be more likely to accommodate their unique borrowing requirements.
3. Flexibility & Decision-Making
Local lenders may also have more flexibility in their lending criteria and decision-making processes versus national lenders. They might be more willing to consider unique borrower situations and local market conditions when making loan decisions.
For instance, for borrowers with limited credit history, a local lender might consider non-traditional forms of credit, including utility payments, rent, or other regular payments. In some cases, these types of payments can serve a similar role in demonstrating financial responsibility as a strong credit report.
4. Networking & Recommendations
Local lenders can be a valuable resource for recommendations to other local professionals, such as real estate agents, appraisers, attorneys, and home inspectors.
Furthermore, they’re your neighbors and likely have professional or personal connections with adjacent businesses you might want to work with. Think contractors, landscape professionals, interior designers一even reliable pet care for Fido.
Not clear on the local school district’s reputation? Unlike national lenders, local mortgage providers likely have intimate knowledge of community-based services, including educational institutions. This can be crucial if you prioritize education as you search for a new home.
5. Issue Resolution
When a problem arises during the mortgage lending process, you want comprehensive answers quickly. What if your financial situation changes? Or you need clarification on loan terms, fees, or closing terms?
If issues arise, it might be easier to resolve them through direct communication with a local expert rather than navigating the complexities of a national help desk. Sure, you can call a national provider’s 1-800 number anytime. But how many different service reps will you encounter, and how many times will you have to explain the situation?
Visiting an office and talking to someone face-to-face or even calling a direct phone line leading to a known service provider can lead to quicker resolutions and a more satisfactory customer experience.
6. Faster Processing & Closing Times
With less bureaucracy than national lenders, local mortgage companies can offer faster loan processing and closing times. Why? Decision-making is streamlined, with fewer approvals required. Additionally, smaller firms often have dedicated customer service teams that handle your mortgage from start to finish, translating to fewer handoffs and mistakes, less miscommunication, and a faster closing overall.
This can be a crucial advantage in competitive real estate markets where quick closings are often required.
A Word About National Lenders
Not all national brands fall short across all criteria compared to local options; though, as discussed above, their size can be more of a hindrance than a help.
Sure, national lenders can benefit from economies of scale, enabling them to offer a wider variety of loan products and the convenience of online applications and digital tools. That said, local lenders are likely to provide the products that best suit the needs of their community, including conventional loans, government-backed loans, and others.
Furthermore, the proliferation of online digital tools has significantly leveled the playing field across the market, enabling smaller mortgage firms to offer selected online services once exclusive to larger companies.
National companies with well-known brands may reassure some, instilling confidence through established reputations and financial strength. However, local firms must adhere to the same federal and state regulations governing lending standards and practices as the big firms. In fact, local firms may be more committed to maintaining a solid reputation within their community, further motivating them to provide reliable and trustworthy services and making them a secure option for borrowers.
What About Rates?
The short answer? A lender's footprint has relatively little impact on interest rates. Both national and local lenders can offer competitive rates depending on funding sources, operational efficiencies, and strategic objectives. You might find variations in rates and fees based on the lender's size, with some local lenders offering lower rates to stay competitive in their community. Likewise, national lenders might leverage their scale for similar advantages.
Ultimately, while significant, your mortgage interest rate should be considered in tandem with other factors discussed here, such as customer service, market knowledge, loan terms, flexibility, and more.
The Takeaway
If you’re searching for a mortgage lender in the New York metropolitan area, consider contacting the experts at Contour Mortgage. Contour is a full-service, local lender that has been meeting the home financing needs of its community for over 30 years.
Known for its exceptional customer service, innovative approach, and local market knowledge, the team at Contour has helped countless individuals successfully navigate the journey to homeownership.
With offices in Michigan, Florida, and the Mid-Atlantic region, Contour also provides the same expertise, dedication, and personalized service in these localities that made it a preferred lender in New York.
Contact Contour Mortgage today to learn more about how we can help with your financing requirements, qualifications, and questions.
