Why I Looked Beyond My Local Bank When Applying for a Mortgage
- When I applied for my mortgage, I got quotes from multiple lenders.
- I opted to broaden my search for a loan beyond my local bank.
- Doing so helped me get a better interest rate and more favorable terms.
Broadening your horizons could lead to a better loan rate.
When I applied for a home mortgage, I was tempted to turn to the bank where I had done business for years. My husband already had a business loan and a commercial mortgage with our local bank, and we had accounts there. It seemed, at first glance, like it would make sense to keep our business with our local branch.
However, after a few meetings with a local mortgage broker at our bank, we decided to look beyond this nearby financial institution. Instead of just sticking with the lender we were familiar with, we looked at national banks, credit unions, and online lenders -- and we ended up going with a big lender that made loans nationwide but didn't have a local branch.
Here's why broadening our horizons and considering multiple loan providers turned out to be the best choice.
We were able to get a lower interest rate
The biggest reason why I decided to expand my search beyond our local lender was that I felt the interest rate we had been offered was higher than it should have been. My husband and I have excellent credit, yet our local bank was offering us a rate above the national average.
After I saw our loan might be more expensive than necessary if we stuck with our familiar lender, I opted to go online and get multiple quotes from different financial institutions. This took just a few minutes, and I was quickly able to find several lenders that offered us more competitive rates.
The national lender was more suitable for our specific needs
We also opted to look for a national lender because we needed a financial institution that was more comfortable with our particular situation.
See, my husband and I are both self-employed business owners, so we don't have conventional income sources like a steady paycheck from an employer. Our small local bank doesn't usually make a lot of loans to people like us, so they had some stricter requirements for how much we could borrow and what we'd have to do to provide proof of income.
By broadening our search for the ideal lender, we were able to find a loan provider that was more comfortable with non-traditional income sources and didn't make us jump through so many hoops.
The closing process was simpler and faster
Finally, the lender we ultimately went with made getting to closing much easier and quicker. We were able to close on our home loan within a little over a month, while the local bank we had been considering usually takes around 60 days to get all the paperwork done and get to the closing table.
We were also able to submit all of our financial documents electronically, and didn't have to meet in person -- both of which made getting everything done simpler.
If we'd stuck with the status quo, we would have ended up with a costlier loan and a lot more hassle. Anyone who is looking for a mortgage could face the same fate if they don't look at a variety of lenders to find the best loan for their situation.
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