Mortgage considerations: Think smaller
Among the tasks involved in the typical home purchase is obtaining a mortgage. And while it might seem easier or more convenient to simply go with what you know, that is, to seek a loan from a bank you’re familiar with, it can be a good idea to stay open. In fact, industry experts advise that a thoroughgoing lender search might end up not only saving you money, it might also help ensure a more consumerfriendly experience. In particular, smaller, perhaps lesser-known, mortgage lenders can offer considerable positive aspects, experts say. Of course, you have to get past the notion that the lesser-known institution necessarily has less to offer.
“There’s probably more important things to evaluate than whether or not you’ve heard of a lender before,” says Peter Holmes, senior loan officer at Sterling Mortgage in Alameda.
What is the chief attraction of using a smaller lender that is not a household name?
One “primary advantage is, I think, the mobility and availability of the loan agent him or herself,” states Holmes. “Typically, the standard of care is generally greater.”
“Oftentimes, with the larger banks,” notes Peter Barnes of RPM Mortgage in Berkeley, “some of the loan agents are a little less experienced. You’re not going to get the same level of service as you would get working with” a smaller lender.
Why might an agent at a smaller institution be more careful about the process?
“Each individual that brokers a loan has to have an NMLS license,” explains Holmes. “Typically, smaller brokerages are populated with individuals that all have those licenses. They’re not operating under a larger corporate licensing.” Consequently, like attorneys that don’t want to run afoul of the State Bar, he says, agents at smaller institutions are careful to dot every i and cross every t.
Another attraction is product exclusivity.
Usually, smaller mortgage “companies are only originating mortgages. They’re not doing car loans or payday loans or
business loans.” Safe from the distractions suffered by general practice reps, agents at lesser-known companies can dedicate themselves to developing an intimate familiarity with every wrinkle of the mortgage loan process.
Moreover, says Barnes, “We are sometimes able to close quickly, faster than some of the larger banks because we’re more nimble and have the systems in place to do that.”
In addition, relates Holmes, “I think small banks are more solutionsoriented . ... The cultural difference between a large bank and a small lender is exactly what you would think. With a small lender, you’re really dealing with someone who is invested in the community, who
typically lives in the community, and who is going to be more consultancybased … relative to the mortgage vehicle the buyer is selecting.”
To sum up, according to Holmes, “Buying a home is one of the largest decisions people are going to ever make in their lifetime. And it warrants a robust research of the people that are going to be involved in that transaction.”
While defaulting to the familiar might seem like good practice, industry experts counsel buyers to keep their options open when choosing a mortgage lender. Selecting a lesser-known institution might result in more personalized service and a smoother, more pleasant experience.