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5 Reasons to choose a direct lender vs. bank

Posted on March 31, 2016 by Deana Manzanares.

Most of us tend to reach out to our bank when looking to apply for a loan, more specifically, a mortgage.  Which seems to make the most sense to us, why not start with the place that holds most of if not all our funds and already has our information. Well, I want to point out some very important factors why you shouldn’t go to your bank first.

  1.    Lack of options– Your bank can only offer you their loan products. Which means they are not able to offer any niche programs, which can include not being as competitive with interest rates or will not have the flexibility to offer a variety of loan options.
  2.    Lack of urgency– Most banks do not run on an efficient time schedule, they have banking hours and may not have the ability to accommodate appointments in the evenings or on weekends.Can you call your bank loan officer after hours in a pinch?  
  3.    May not close on time– They will not have a quick turnaround time, including processing and underwriting your loan to close on time. Will they commit to efficient processing of your loan and not leave you hanging come the closing day?  
  4.    Customer service– You will not receive a personal customer service experience.  They do not need your business to grow their business.  Large banks have the funds with our without your loan so in reality your priorities are not first on their list because there is another applicant right behind you.
  5.    Timelines– This ties together the previous 3 on the list.  Banks will not have the urgency or need to get back to you in a timely manner.  Your calls/emails may not be returned within the same day or even the next day.  For most loan officers at a bank, they get paid a salary with bonuses.  Yes, this may seem good but in reality again, they are working for a bonus, not working for your business.  If a loan officer is paid  solely on commission, don’t you think they want to earn your business?  Doesn’t it give the commission based loan officer more incentive to make sure you are satisfied so you can tell your friends and family?  Does that mean you are being charged more? No.  In fact, it may be the opposite.  A commissioned loan officer may have better flexibility in offering lender paid closing costs.  

It’s not on the list because it is a pivotal item, if you are purchasing, many listing agents will not accept offers that have a pre-approval letter from “said” bank! The reason is because they have had too many deals not come through in the end or have had one too many complications with  “said” bank.  Whether they didn’t close, close on time and/or had too many delays during the process because the due diligence was not done efficiently.  

Bottom line, think twice before heading into your bank as your first option for a home loan.

 

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