Are local lender better than out of state lenders ? if so , why?

Asked by dxr8273, West Henrietta, NY Thu Apr 10, 2014

I'm looking to be a first time home buyer. Are local lender better than out of state lenders ? if so , why?
Thank you in advance for your answers.

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Annette Law…, Agent, Palm Harbor, FL
Thu Apr 10, 2014
#1. Accountability
If the out of state lender denies you loan 3, 2 or 1 day before closing, there is no way to hold the lender in NV accountable.

#2. Awareness
An out of state lender, or big bank lender will rely on the 'gut instincts' of the underwriter and will allow the underwriter to sink the deal. They are too remote to know the local real estate market. Yep, they rely on Zillow.

#3. Regulations.
Big bank and multi-state lenders (the top 16) have a third layer of 'Fair Lending Requirements' not imposed on smaller lenders. If your deal falls outside those guidelines your mortgage will be denied and you will never know the truth. "Found something in your credit record is the code words."

#4. Get this away from me
Big banks and out of state lenders ARE in the business of RESELLING the mortgage and collecting the financing and sevicing fees...NOT LENDING MONEY! Because of this, the process, appraisal and underwriting is all about assuring they can RESELL THE MORTGAGE, and has very little (nothing) to do with your hearts desire of owning a home.

#5. I will keep this
Local lenders are less likely to be in the reselling business. This means the lender you use is the one you can hold accountable. This means, since the lender is keeping the mortgage, they have incredibly more flexibility in providing you a mortgage.

#6. I'll go first.
Some local lenders and one large lender will actually invest in you BEFORE you spend money on inspections and appraisals. They will run your application through their underwriting process FIRST and provide you a Clear-to-Close before you spend a dime. That means the lender has COMMITTED to giving you the MONEY!

As you can see, a local lender is much more likely to invest in your success, allow themselves to be held accountable by you and the professionals they must work with, and are able to remove much of the uncertainty of buying a home.

If you need more....I would have to ask, "Are you kidding?"
Overwhelming evidence directs you to a local lender. How will you feel if Wells Fargo abandons you at the buyers alter after knowing all of this?

Annette Lawrence, Broker Associate
Remax Realtec Group
Palm Harbor, FL
1 vote
Apparently there is significant differences with local lenders.
All that I stated will be true regarding local PORTFOLIO lender.
All that I stated is true regarding 'Clear-TO-Close' provisions.
Perhaps, if someone is looking to finance a home purchase, calling the REALTOR first is a good idea.
Not all lenders are equal.
Flag Fri Apr 11, 2014
No disrespect but, you meant overwhelming opinion right? None of what you said is evidence of anything other than your own opinion. As I stated, I am a local lender and much of what you said would not apply.
Flag Thu Apr 10, 2014
Hilary Lefko…, Agent, Philadelphia, PA
Thu Apr 10, 2014
I would recommend using a local lender over an out-of-state lender. While I have had good and bad experiences with both, a local lender should know the intricacies of the local market, which can sometimes make or break a transaction.
1 vote
RonS, , Concord, CA
Thu Apr 10, 2014
No difference in my opinion and experiences with a national presence versus a local presence. A 30 year fixed rate loan in California is the same as it is in Texas or New York. If you have to sit face to face with someone then by all means, go with a local lender (That is more than likely a national lender with a local branch or a local lender selling to a national investor, based on national loan guidelines).

While some of the "Local lenders" may know a property nuance better than a national lender, it's the property that is different, not the loan. The local lender may not have access to the investors and programs that a national lender has.

As an example, I am a local lender. I know manufactured housing better than the BofA's and the Wells guys do but, as a local lender, I cannot expose the bank to the additional risk of a 90% loan on manufactured housing. Wells and BofA can absorb the loans and have no material impact on their portfolio whatsoever. They have scale of economy on their side and I don't as a local lender with a much smaller portfolio. So what do I do? I either turn the loan down or, I underwrite the loan to the guidelines of Wells and BofA and sell it to them. My point is, it makes no difference who you use.

70% of all loans originated in the United States are sold to Fannie and Freddie, a national entity with national guidelines. All "Local Lenders" that originate loans and sell to them (Fannie and Freddie), use the exact same guidelines. There are no locational differences in guidelines that I've become aware of in over 20 years doing this. There may be property type specific differences but we need to differentiate a unique property from a location.
1 vote
Christopher…, Agent, Tarrytown, NY
Thu Apr 10, 2014
local lenders understand the local market. I had a Wells Fargo agent form the midwest kill a coop deal in NY because he didn't understand the process. That being said, not all out of area lenders will make mistakes but why not choose someone local.

1 vote
Kim Juhasz, Agent, Tucson, AZ
Thu Apr 10, 2014
Local is better because you can meet face to face with your lender. If for some reason a document that is needed at the last minute, you can drive it to the office instead of worrying about how to get it to the lender in time. Also, if using a lender that your realtor is familiar with, communication may be better.
1 vote
Stan Tobiason, Agent, Twin Falls, ID
Thu Apr 10, 2014
I think it's much better to be able to meet with someone in person and get answers.
1 vote
Liz Walker, Agent, Portland, ME
Thu Apr 10, 2014
I would recommend you use a local lender. If there is additional paperwork that needs to be signed, or somebody needs a copy of your driver's license, a local branch makes it easier to contact the bank.
1 vote
Kirsten Well…, Agent, Atlanta, GA
Thu Apr 10, 2014

I always recommend that my buyers use a lender that they can drive to the lenders office. I also recommend smaller mortgage brokers vs big box bank lenders.

Why you ask?

1. Past clients have become frustrated with time differences. They are just getting started in the morning while the East Coast is at lunch.
2. My clients have felt they got better service from a local person. If you had to go there for some reason, you can.
3. I recommend a smaller lender. I find a huge variety of quality loan officers when you call a 1800 # and are "assigned" or get whoever answers the phone.

I can think of 1 time in 10 years that my clients got exceptional service from a far away lender. It was their credit union. More often than not, my buyers have become extremely frustrated during the process. I can think of time after time where buyers got exceptional service from a local lender.

Kirsten Wellborn
Garrett Realty
1 vote
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