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Should You Choose Your Local bank or a Mortgage Company to Finance Your Home

Purchasing your first home is a big decision. Everyone wants to make sure they are getting the best deal possible. After all, you will be paying on your new home for 30 years in some cases. Without insider knowledge or experience buying a home it can be difficult to tell if you are being over charged fees or the interest rate is too high. So who should you work with? The bank you currently have a relationship with or an independent mortgage company. 

 

Savings and Loans

A savings and loan is an institution that accepts your hard earned savings and pays interest on the holdings.  Typically they offer savings accounts, checking accounts, personal loans, and car loans. Some Savings and Loan institutions will also let you borrow money to purchase your new home. 

Before the financial crisis (The Mortgage Meltdown) of 2007, a Savings and Loan was usually your best option to obtain real estate financing. Independent mortgage companies were a better option for borrowers with unique financial situations or challenged credit. The Savings and Loan was the “go to” institution for borrowers with great credit and a large down payment. After the subprime mortgage crisis of 2007 this changed dramatically. 

Post Mortgage Meltdown, governement regulators began demanding higher standards for borrower with new regulations and policies that made lending more difficult to do. Where a loan used to close by the work of one person, now lending became very specialized. As a way to adhere to the new rules and regulations installed by the CFPS (Consumer Financial Proetction Bureau) , banks needed specialists. They needed more knowledgeable underwriters and systems that made sure the bank adhered to the new regulations. 

Savings and loans were on their way out

Mortgage lending almost immediately became less profitable and more demanding. Mortgage lending fell into the background of their core business. Instead of a focus, mortgages became a convenience service to current clients.  

As the lending climate changed, independent mortgage companies had the advantage.

Independent Mortgage Companies

As the Savings and Loan banks were moving away from lending, independent mortgage companies sole focus remained mortgage lending. The mortgage companies sole purpose has always been to provide housing to families across America.  They invested in systems and educated professionals to bethe very best at what they could be. They focused heavily on compliance and insured transparency to their clients. Gone were the days that a borrower could be surprised on closing day. Clients knew exactly what to expect at closing and client satisfaction propelled the independent mortgage companies past the Savings and Loans. 

Mortgage companies did not have to worry about checking or savings accounts. They didn’t have to worry about car loans. The mortgage company solely focused on providing the best experience possible for home buyers. 

Who Should You Choose to FInance Your Home?

If you had a clogged toilet, would you call an electrician? If you needed an oil change, would you call a carpenter? 

The mortgage companies have always had the advantage. Mortgage companies can provide the best possible service with the lowest fees and rates. Mortgage companies do not need to make a significant profit to pay for 30 tellers or a prime downtown location. When a mortgage company makes an investment, that investment is in continued education or advanced systems to give clients a better experience. 

If you want the convenience of working with one bank…. go to your savings and loan. If you want the best financial plan tailored to suit your needs and the lowest rates and fees, talk to a ortgage company. You will have to go to a different building. You will have to meet new faces but we feel confident you will be glad you did so. 

 

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