Should I Use a Lender or a Bank for My Home Loan?

Buying a home is one of the most important purchases you'll ever make, so it's best to stay informed of all the options available to you. Although both mortgage lenders and banks can help you get the funds you need to buy, there are pros and cons to each choice. Traditionally, mortgage lenders have more options for homebuyers than banks. Depending on your current financial profile, you may qualify for more than one type of loan. However, you'll find a good fit for you based on your long-term goals, housing needs, current standings.

Mortgage Lenders

A mortgage lender is a bank or financial company that lends money to borrowers to purchase a home. A mortgage lender or bank can be both the loan provider and the servicer of the mortgage. Despite funding the loan initially, the lender will often sell your loan to a larger financial institution, which is typically why lenders can offer lower interest rates than banks. The good news is, consumers have government-mandated protections relating to the servicing of home loans. These protections also cover loan transfers from one servicer to another, so this shouldn't be a concerning factor when deciding between a bank or a mortgage lender. In some cases, borrowers may also find that a mortgage lender will be less strictly regulated than a bank and more forgiving of less than perfect credit. This is not always the case, so it's best to speak with a financial advisor and weigh all options carefully. Borrowers also have the opportunity to choose a local mortgage company that can help guide them through the home loan process from start to finish. Mortgage lenders must pass several mortgage-related courses and exams, which helps them develop a deep level of knowledge in the industry. At PacRes, we also provide Fast Track Financing, an innovative new mortgage process that saves borrowers time and stress of gathering unnecessary paperwork for loan approval. The process utilizes our innovative digital customer portal and in-house appraisal division^*. Mortgage Lender Pros

• Possibility for lower interest rates
• Diverse loan options
• Potentially faster closing time
• In-depth knowledge about the process
• Can meet with local advisors

Mortgage Lender Cons

• The lender may only provide online services if there is no physical location near you
• Your servicer may change after closing

Banks

If you have an existing relationship with your current bank, this may be the more "comfortable" choice. On the other hand, the most comfortable choice may not be the best choice for your long-term goals. The difference in loan type and length could end up saving you thousands of dollars over the life of your loan. However, some banks offer special benefits or discounts for existing banking customers that choose to apply for a home loan with them. The offers often include special savings or checking accounts, credit cards, and other products. The best way to learn more about this is to reach out to a representative at your bank. (They may also have insight on upcoming promotions to take advantage of.) One major downside of a bank loan is that they often come with stricter lending guidelines. Not to say that a mortgage lender would have lower standards, but your loan may take longer to close if you've had a major financial event, such as a foreclosure or bankruptcy. Bank Pros

• Existing relationship
• May offer special rates

Bank Cons

• Less mortgage lending experience
• Possibly longer closing time
• Stricter lending standards

Interested in learning more? Contact a Mortgage Advisor for a complimentary consultation!

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*The PacRes in-house appraisal division handles appraisals in multiple states. Find out more details by contacting a Mortgage Advisor.