When you’re ready to buy a house, you can choose between different types of financial institutions for a loan such as a bank or a mortgage company. Most people aren’t able to pay cash for a house, so a loan puts homeownership within reach sooner.
But while various types of lenders can provide funding—and the loan process from start to finish is relatively the same—there are benefits to working with a bank versus a mortgage company.
Here’s a look at four reasons why a bank might be the right choice for your next mortgage.
Banks typically have physical locations.
Nowadays, you can do just about anything online. This includes paying your bills, buying clothes, making travel arrangements, and yes, even getting a mortgage loan.
But even though the ability to complete an online mortgage application saves time, you might also prefer the convenience of a physical location in your community.
Some mortgage companies are online-only, which means you’ll complete the entire loan process virtually. You’ll fill out an application online, communicate with your loan officer via email, upload documents to an online portal, and possibly sign your loan documents electronically.
Some people are comfortable with technology and these formalities, but others like the option of face-to-face interactions.
One benefit of working with a bank is that you’ll often have access to branches in your area. You can speak with your loan advisor in-person or stop by to drop off documents.
In addition, some banks provide in-house underwriting and closing, whereas a mortgage company might outsource to a third-party company.
Banks might offer lower rates and discounts.
To be clear, different factors ultimately determine your mortgage rate. These include your credit score, the type of loan, and the size of your down payment. Typically, borrowers with the highest credit scores qualify for the lowest rates.
But although these are key factors that influence rates, they aren’t the only factors.
If you have a pre-existing relationship with a bank—and you apply for a mortgage with this institution—you might secure a lower rate and be eligible to receive other discounts to reduce your costs.
And if another bank quotes a lower mortgage rate and/or fees, your personal bank might match their offer.
Banks might service your loan after closing.
If you apply for a loan through a mortgage company, this lender isn’t likely to service your loan after closing. They’ll probably sell the mortgage servicing rights, meaning you’ll make payments to another company.
Banks can also sell their loans after closing. However, they might keep some of the loans they originate in their portfolio, instead of selling them to investors.
Banks have different financial products and loan programs.
Another difference between a bank and a mortgage company involves their variety of financial products.
When working with a mortgage company, you’ll only have a selection of home loan products. These might include loans for new purchases and refinances, reverse mortgages, jumbo loans, and home equity loans.
On the other hand, banks provide customers with a wealth of other financial products. These can include savings accounts, checking accounts, and investment accounts. So there’s an opportunity to use a single financial institution for all, or most, of your financial needs.
Banks may also offer financial assistance and educational opportunities through local, state and national programs, and so they can be a great resource for homebuyers.
Although mortgage lenders come in different varieties, working with a bank over a mortgage company has its advantages.
You can often enjoy the convenience of physical locations, in-house services, plus banks have an abundance of other financial products and mortgage solutions. Are you ready to buy or refinance your house? Contact the loan experts at FirstBank Mortgage to explore your home loan options. Whether you’re buying or refinancing, we’d be honored to help with your loan.