Many borrowers tell their loan officers that they prefer obtaining their mortgage through a smaller shop rather than a huge national bank. That is an interesting phenomenon – what is happening out there? After all, aren’t the rates and prices all the same?
It turns out, the answer is “no.” For smaller lenders, size is critical. They are more nimble. Midsized firms, for example, pride themselves on processing times, quick underwriting, and being able to close loans in a timely manner. Currently some of the large national banks take over a month, even two or three, to close a loan.
During the financial crisis in 2009, it stung larger home lenders, and the heightened regulation that followed hasn’t done them any favors. Still, the biggest banks, on average, originate roughly double the volume of all other banks each month.
Returns have something to do with that. While interest rates are low, mortgage returns have risen because such loans have become more attractive to secondary buyers, partly because of stricter underwriting standards following the housing meltdown.
Teams of experienced LO’s, processors, and other support staff allow us to find the best rate and price among several companies, and do it efficiently and usually less expensively than a large bank. Non-huge lenders pride themselves on customer service, great pricing, and knowledge of the local markets. It is very hard for a new loan officer in a bank branch to beat that. And borrowers, in turn, are agreeing.
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