Reasons to go with a local vs national mortgage lender?

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WHL
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Reasons to go with a local vs national mortgage lender?

Post by WHL »

The real estate agent told me that the local lender has knowledge of the local market and requirements and could potentially save me money by not requiring certain things that aren't necessary per my local government that the national lender may not know about.

Obviously, the appeal to a huge national lender is the rock bottom rates. My check is going to be sent to a company, I don't care who it is, so why not make the check as small as possible?

I would appreciate any comments or experiences! First time home buyer...
livesoft
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Re: Reasons to go with a local vs national mortgage lender?

Post by livesoft »

My experiences are that the local lender cost me money. We used a mortgage broker after shopping around for our first loan. Later when internet loans came out, she was going to cost us a few thousand dollars more to refinance and would not budge. My advice is to shop around and don't believe what anybody tells you … especially a real estate agent.

Also you should expect your loan to be sold to a national mortgage operation … perhaps even before you have to make the first monthly payment. Don't let that weird you out.
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Topic Author
WHL
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Re: Reasons to go with a local vs national mortgage lender?

Post by WHL »

livesoft wrote:My experiences are that the local lender cost me money. We used a mortgage broker after shopping around for our first loan. Later when internet loans came out, she was going to cost us a few thousand dollars more to refinance and would not budge. My advice is to shop around and don't believe what anybody tells you … especially a real estate agent.

Also you should expect your loan to be sold to a national mortgage operation … perhaps even before you have to make the first monthly payment. Don't let that weird you out.
I'm assuming, from informal past quotes, that the local lender is going to be more expensive.

Completely expecting this, it's not a concern. There's no way my small market, tiny lender could afford to have so many outstanding loans. They're definitely just a broker / reseller.
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Tycoon
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Re: Reasons to go with a local vs national mortgage lender?

Post by Tycoon »

livesoft wrote:My experiences are that the local lender cost me money.
This was my experience. Never again.
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Twins Fan
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Re: Reasons to go with a local vs national mortgage lender?

Post by Twins Fan »

Your real estate agent likely has local contacts they might get perks or kick backs from also. Don't forget where their interest really is.

Definitely put a few applications out and go with the best for you. Maybe see what the local lender offers?

I've done a purchase and refinances over the internet the last few times. Whatever that my be worth to you.
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WHL
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Re: Reasons to go with a local vs national mortgage lender?

Post by WHL »

Twins Fan wrote:Your real estate agent likely has local contacts they might get perks or kick backs from also. Don't forget where their interest really is.
For sure - this is why I am skeptical and haven't considered using them in the past, and why I didn't use the dealerships financing when I bought my last vehicle.

I'll do some shopping around, definitely.
NorCalDad
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Re: Reasons to go with a local vs national mortgage lender?

Post by NorCalDad »

As with being a consumer of anything, you should do the research and challenge any suspicious or excessive line item in your loan closing documents. This is regardless of whether the lender is local or national.

I also wondered how quickly your agent followed up with a list of recommended local lenders. Frankly, advice like that would make me question whether your agent is the right person to be negotiating your home purchase. I'd be concerned either that the agent is getting a kickback without disclosure or simply lacks financial savvy.
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Kenkat
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Re: Reasons to go with a local vs national mortgage lender?

Post by Kenkat »

I would look for a lender, local or national, that does not sell the servicing of the mortgage. I know you shouldn't have to care who you send your check to, but it is not all that uncommon for there to be issues during the transition period such that payments are not properly credited as well as some class action lawsuits over changes in fees or insurance requirements imposed by the new servicer.
retiredjg
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Re: Reasons to go with a local vs national mortgage lender?

Post by retiredjg »

Why not look at both? A few phone calls to local banks and credit unions will take you less than an hour. I refinanced in 2012 with a local credit union (had to join - $25 I think) and the rate was great and the refi took less than a week.

There is something very helpful about being able to drive to a location and hand them documents. Or vice versa.

Whatever you do, DON'T USE PENFED! I'm currently using PenFed and it is like pulling teeth. Actually, pulling teeth may be less stressful....
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WHL
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Re: Reasons to go with a local vs national mortgage lender?

Post by WHL »

NorCalDad wrote:As with being a consumer of anything, you should do the research and challenge any suspicious or excessive line item in your loan closing documents. This is regardless of whether the lender is local or national.

I also wondered how quickly your agent followed up with a list of recommended local lenders. Frankly, advice like that would make me question whether your agent is the right person to be negotiating your home purchase. I'd be concerned either that the agent is getting a kickback without disclosure or simply lacks financial savvy.
Actually, I asked her if there was anyone local she used and would recommend - she didn't sent it to me unsolicited. I'll see what they say Monday - I submitted the online application earlier and have my whole packet of financial documentation ready to go.
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WHL
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Re: Reasons to go with a local vs national mortgage lender?

Post by WHL »

retiredjg wrote: Whatever you do, DON'T USE PENFED! I'm currently using PenFed and it is like pulling teeth. Actually, pulling teeth may be less stressful....
Duuuuuuuude, WTH? I applied with them this morning and was approved, pending verification of documents, of course. They have the best no points rate I could find at 3.125%...can you elaborate on your experiences? They are typically spoken highly about on these forums, particularly for their CD rates, so I figured a mortgage would be fine, too. :(
retiredjg
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Re: Reasons to go with a local vs national mortgage lender?

Post by retiredjg »

WHL wrote:
retiredjg wrote: Whatever you do, DON'T USE PENFED! I'm currently using PenFed and it is like pulling teeth. Actually, pulling teeth may be less stressful....
Duuuuuuuude, WTH? I applied with them this morning and was approved, pending verification of documents, of course. They have the best no points rate I could find at 3.125%...can you elaborate on your experiences? They are typically spoken highly about on these forums, particularly for their CD rates, so I figured a mortgage would be fine, too. :(
Well, I'm not a dude, but...check out the current thread at http://www.bogleheads.org/forum/viewtop ... st=2095729 . If you use the search button, you will find other threads in the same vein.

Everybody loves PenFed but it seems many report very poor customer service when using the mortgage department. There are some satisfied customers, but the majority who have posted at Boglehead's are not happy customers (by my count). A few sound near livid.

The emails you send will probably get answered in 5 to 7 days, at which time the situation is different and the response you get is no longer timely. Your phone calls will probably be returned in 5 to 7 days if they are returned at all. You will fax them information and a week later they will ask you for that same information. The appraisal they ordered may or may not get done on time. You may or may not be notified of the results of the appraisal. Your closing may or may not happen when you schedule it. In their defense, I didn't see many reports of this happening, but I do believe I recall 2 closings that didn't happen on time reportedly because of PenFed.

I would say to tell them your closing date is 2 or 3 weeks after it is, but you can't do that - it is on the contract. When you do get a contract, give yourself longer than normal before end of due diligence and settlement and maybe that will help. Or maybe they just won't do anything until the last minute anyway.

It is very frustrating to fax your info into some big black hole and find out 7 to 20 days later that what you sent won't work and you have to send something else into a big black hole and never even know if it got there. There is something wrong with their system. I'm sure they are mostly very nice and competent people but customer service sucks and for the suckiness to be that widespread and over so many years, there has to be something wrong with how they are doing business. I wish I could be more encouraging.

So if you feel like putting up with that, go for it. I may not have been this dissatisfied if I had know it was going to be this big a PITA. And you may just get lucky and be one of the few who has a great experience!

Yes, they do have a great rate. There will be an origination fee though - be sure to factor that in as I'm not sure that occurs with every mortgage lender.
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WHL
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Re: Reasons to go with a local vs national mortgage lender?

Post by WHL »

retiredjg wrote:...You will fax them information...
One quick question here...I don't fax anything. Do they require fax for some documents, or is email sufficient? I'm not going to do business with someone still prominently utilizing fax machines.
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Kenkat
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Re: Reasons to go with a local vs national mortgage lender?

Post by Kenkat »

WHL wrote:
retiredjg wrote:...You will fax them information...
One quick question here...I don't fax anything. Do they require fax for some documents, or is email sufficient? I'm not going to do business with someone still prominently utilizing fax machines.
Regular email is not really secure for sending financial details, especially social security numbers, etc. Some lenders utilize secure email in which the information never leaves their servers, but fax is often used as well.
retiredjg
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Re: Reasons to go with a local vs national mortgage lender?

Post by retiredjg »

WHL wrote:
retiredjg wrote:...You will fax them information...
One quick question here...I don't fax anything. Do they require fax for some documents, or is email sufficient? I'm not going to do business with someone still prominently utilizing fax machines.
The did email me the original documents and there was a password to open them. But they request returning information to come by fax because they say it is more secure. However, I don't know that they would refuse emailed documents.

"Email transmitted across the Internet is normally not protected and may be intercepted and viewed by others. Therefore, you should refrain from sending any confidential or private information via unsecured email to PenFed. We will not ask you to send confidential information to us via email, such as your logon ID, password, account numbers, or Social Security number. We prohibit our employees from sending confidential information to you via email that is not encrypted. The recommended document submission method is FAX; a partial list of generic fax numbers can be found here."

On the other hand....I got some documents (securely) from my other credit union this morning by email. Bank statement and copies of cancelled check. Things I had just learned that the underwriters would want in a different form from what I had provided 3 weeks ago ( :annoyed ). The other credit union took care of me in about 10 minutes. Then I drove down to the UPS store so I could fax it to PenFed.... Maybe late next week, I'll hear something. :happy
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Re: Reasons to go with a local vs national mortgage lender?

Post by Van-Guard23 »

livesoft wrote:My experiences are that the local lender cost me money. We used a mortgage broker after shopping around for our first loan. Later when internet loans came out, she was going to cost us a few thousand dollars more to refinance and would not budge. My advice is to shop around and don't believe what anybody tells you … especially a real estate agent.

Also you should expect your loan to be sold to a national mortgage operation … perhaps even before you have to make the first monthly payment. Don't let that weird you out.
Similar experience here when my wife and I refinanced our house a couple of years ago from 30-year fixed -at 5.125%- to a 20-year fixed - at 3.5%. Initially contacted a local company/broker touting good rates and "knowledge" of the local market. I also contacted multiple lenders nationally and was able to get a better quote and lower fees (over $6k less) than the local company...so it was a no-brainer. For our second refinance last year, I contacted Wells Fargo (the company servicing our loan) to see if they can refinance from a 20-year fixed to a 15-year fixed with a favorable rate and fees. They couldn't do better than 2.625% for the 15-year fixed and couldn't beat a direct lender we used for our first refi, which had better rates and lower fees. In the end, we used the same company for our first refi and got a 2.5% APR for a 15-year fixed. However, a couple of months down the road, the loan was sold back to Wells Fargo...and they couldn't or wouldn't match the lower rate to begin with. I would've thought they would rather do the refi in-house and match the rate offered by other companies but they opted to just "buy" the loan back from another company.
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Re: Reasons to go with a local vs national mortgage lender?

Post by MikeRes »

Van-Guard23 wrote:However, a couple of months down the road, the loan was sold back to Wells Fargo...and they couldn't or wouldn't match the lower rate to begin with. I would've thought they would rather do the refi in-house and match the rate offered by other companies but they opted to just "buy" the loan back from another company.
Are you sure that the mortgage was sold to WF?
Perhaps just the servicing of the loan was transferred to them.
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Van-Guard23
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Re: Reasons to go with a local vs national mortgage lender?

Post by Van-Guard23 »

MikeRes wrote:
Van-Guard23 wrote:However, a couple of months down the road, the loan was sold back to Wells Fargo...and they couldn't or wouldn't match the lower rate to begin with. I would've thought they would rather do the refi in-house and match the rate offered by other companies but they opted to just "buy" the loan back from another company.
Are you sure that the mortgage was sold to WF?
Perhaps just the servicing of the loan was transferred to them.
I stand corrected...I relooked my documents and the mortgage loan from the second refinance was actually sold to Freddie Mac and serviced by Wells Fargo. The first refinance was sold to Fannie Mae and was serviced by Wells Fargo as well. I suppose these are common practices in the mortgage business.
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PS241
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Re: Reasons to go with a local vs national mortgage lender?

Post by PS241 »

Our mortgage is with a local bank, and personally I wouldn't go any other way. Here's a few reasons why:

1. I had 2 local banks competing for my business. This caused a reduction of $2k in closing costs.
2. I know the people that work there. My money goes to support them and is re-invested back into the community.
3. They give me a free lunch every summer.
4. They have given me over $100 in free cash at various raffles.
5. They donate prodigiously to nearly every local charity event.

It feels good to support a local business.
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Re: Reasons to go with a local vs national mortgage lender?

Post by denovo »

OP, your agent isn't looking out for you.
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Re: Reasons to go with a local vs national mortgage lender?

Post by jollystomper »

To the OP, check on your own with local banks - the realtor may be trying to steer you towards ones which they benefit from.

We had a national lender for over 20 years, but for our last refinance we went with a local bank. The rate was better, the closings costs were lower, and the process was much more efficient. With the national lender they didn't seem to care about keeping the mortgage, and the local lender was very interested in our business but not excessively aggressive.
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Re: Reasons to go with a local vs national mortgage lender?

Post by lululu »

WHL wrote:
retiredjg wrote:...You will fax them information...
One quick question here...I don't fax anything. Do they require fax for some documents, or is email sufficient? I'm not going to do business with someone still prominently utilizing fax machines.
Just because you "fax" something, doesn't mean a fax machine is involved on either end. Faxes I receive go directly to my email inbox. Faxes I send are via uploading to a website, although I think I could email them to get to that same system if I wished. Faxes my doctor's office receives go directly to their electronic records system with no fax machine in the path.
tim1999
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Re: Reasons to go with a local vs national mortgage lender?

Post by tim1999 »

In my experience, dealing with a local loan broker has cost me more money, while dealing directly with a local bank has saved me a considerable sum.
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Re: Reasons to go with a local vs national mortgage lender?

Post by hmw »

I just signed a contract on a house and have mortgage pre-approved with a local credit union and an online lender. I did some shopping a couple of months ago and I found that local banks and credit unions generally have higher rates/more fees than on line mortgage lenders. I have a hard time getting hold of the local mortgage person (she does not seem to use email) and the on line mortgage person is a lot more available. I will probably end up going with a on line lender and hopefully everything will go smoothly.
perl
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Re: Reasons to go with a local vs national mortgage lender?

Post by perl »

WHL, this is really going to vary depending on where you are and what the local banks/credit unions are like. As you can see from the answers you've received so far, different people have different experiences. Immediately jumping to the conclusion that your real estate agent is lying to you or corrupt doesn't seem warranted.

When we bought our house a year ago, we got a much better mortgage deal with a local credit union. This local credit union was recommended by our agent, but I did quite a bit of comparison shopping. I looked at local banks/credit unions, a local broker, national banks, and online banks. The local credit union had the best deal by far - a better rate on a 30-year fixed mortgage, and closing costs thousands of dollars lower than the competition.

In addition, our local credit union doesn't sell the mortgages it issues and doesn't sell the servicing. For me this was also a bonus, because there have been news stories of loan/servicing sale nightmares that have resulted in people losing their houses despite making all their mortgage payments. Because of this looking into what happens to the loan after it is made and what people's customer service experience has been is worth it.
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