Mortgage lenders in your community offer many benefits, including lower rates, easier loan applications, and many types of loans. They can provide traditional fixed-rate loans, in-house mortgages, construction loans, and specialized loans for physicians and executives. You can also get a construction loan to build a custom home. And all of these advantages are available to you when you work with a local lender. Read on to learn about the advantages of each type of lender.
Credit unions offer lower rates
While credit unions may not have the marketing muscle that banks do, they have many other benefits that make them an excellent choice for local mortgage loans. For example, they have lower rates for their members. Credit unions are member-owned institutions, which allows them to offer lower rates than other mortgage lenders. Additionally, they can apply your mortgage information to many other services. Consequently, many people prefer to use their entire banking experience through credit unions. They offer savings accounts, checking accounts, credit cards, financial resources, and even partnerships in investments.
In addition to their low interest rates on mortgage loans, credit unions often offer higher interest rates on savings accounts and CDs. This allows you to accumulate more money over the loan’s life, which increases your financial growth potential. Credit unions also offer lower fees and require lower minimum balances for savings accounts, allowing you to save more money in other areas. Compared to banks, credit unions have better rates on other types of loans, including auto loans and home equity loans.
Hard money lenders offer smaller down payments
Compared to traditional banks and mortgage lenders, hard money lenders require a smaller down payment. These lenders offer higher interest rates and fees, but the benefits far outweigh the downsides. A typical loan requires 20% to 30% of the property’s value as the down payment. Some lenders even waive this requirement altogether. However, be wary of bogus lenders who advertise “no down payment loans” in order to attract unsuspecting buyers. Most lenders charge a small loan origination fee, which is usually between 1% and 10% of the loan amount.
Compared to traditional mortgage lenders, hard money lenders are also more flexible with their loan terms. While a traditional mortgage lender typically requires a 30 percent down payment, hard money lenders typically require a smaller down payment. This is because hard money lenders typically offer lower LTV terms, such as 70% or lower, based on the property’s ARV. This allows them to recoup more of their funds if a borrower defaults on the loan.
Community banks offer faster loan approvals
One reason why community banks are better for small business loans is their speed. Traditional banking models require mountains of paper, physical signatures, and long meetings to approve loans. Community banks can provide the same level of service while maximizing their limited resources and staff. By using board portals, lending officers can review and approve loans online, while senior management can track the status of loan applications. This streamlines the entire process and keeps the loan pipeline full. By implementing automated lending processes, community banks can approve new loans faster than ever.
A community bank is a local depository and lending institution that serves a specific geographic region. It is usually locally owned and focused on relationship-oriented banking. Community banks are different from national banks, which use their money to fund loans all over the country. A community bank is more likely to consider personal relationships and the local economy when making lending decisions. Community banks are also less likely to use loans from larger institutions to fund new branches.
Retail lenders offer multiple lending options
Most people think of banks when they’re looking for a home loan, and those banks often offer multiple lending options. In addition to mortgages, retail lenders include mortgage banks and credit unions, which offer mortgages and other loans to consumers. While each type of lender is responsible for their own set of lending criteria, most share common practices. Local mortgage lenders offer multiple lending options for homebuyers, which means that you’ll have the most choice.
Many mortgage banks borrow money from warehouse lenders, who buy loans from borrowers and resell them on the secondary market. Fannie Mae and Freddie Mac back most U.S. mortgages, and are backed by private investors who pay a short-term note to the buyer. In addition to retail mortgage banks, you can find personal loan and checking accounts from retail lenders, and take out personal loans from them.