Sarah Pierce (Head of Operations at Better Mortgage) breaks down the questions to ask when you’re considering a local lender
When you’re looking to buy a new home or refinance your current one, the thought of working with a local lender can be appealing. That person-to-person “handshake” is how business has always been done, and working with someone who knows your neighborhood or city can provide a sense of comfort and confidence in the process. But going with your local lender may not always be the best choice for you, depending on your needs. We built Better Mortgage to remove some of the pain points of working with a local lender (hello, 24/7 access and the ability to do everything online) while keeping the personalized service you know and love.
We’re obviously biased, so let’s talk about the pros and cons. We’ll arm you with the questions you can ask yourself, your local lender, and your real estate agent to ensure you’re making the right choice.
Questions to think about when considering a local lender
- Do you care about speed and certainty?
- Do you care about affordability and rates?
- Do you care about transparency?
- Do you care about face-to-face interactions?
Do you care about speed and certainty?
A personal referral to a local lender who has a track record of being responsive and closing on time is hard to ignore. But make sure to ask them the following, more pointed questions to ensure that your timeline and needs are met.
Ask your local lender:
How long does it take to get a pre-approval? This is the best way to learn how much you can realistically borrow—and your accompanying pre-approval letter will show sellers that you're serious about making offers.
How often do customers’ closing dates need to change due to issues with the loan? Delays can be costly. Make sure you know what to expect from your local lender around closing times and what they’ll do if something doesn’t go as expected.
Do you fully underwrite your loans? If they’re working with outside underwriting parties, this could add time-consuming back-and-forth to collect or verify documentation before your loan can close.
What is the turnaround time for appraisals across all their loans? A fully approved mortgage requires a fully completed appraisal. Delays from back-and-forth between a local lender and their Appraisal Management Company can lead to costly delays.
Better Mortgage, by the numbers
- Get a basic pre-approval in 3 minutes by entering some basic financial details. You can change the terms and re-check the estimate instantly. No fee, no strings attached. (This can take days with brick and mortar lenders.)
- We close 10 days faster than the industry standard, which is 42 days. On average, we can do it in 32.
- Access to our website 24/7 and instant Loan Estimates. Need a status update? Check out your online portal at any time during your application process. This also gives you instant access to your Loan Estimate. Local lenders can and will take up to 3 days to deliver a Loan Estimate—which is the most important document for comparing your home loan options. When you're ready to lock your rate, you can do that instantly, too. There's no need to get your lender on the phone and miss out on your desired rate. We let you lock in 24/7 at the time that works for you.
With our technology working around the clock and underwriters in multiple time zones, we can run the numbers and let you know about any change in the status of your loan instantly. Instead of spending time “selling” other customers or realtors, our dedicated non-commissioned Loan Consultants are available to help via text, phone, or email.
Do you care about affordability and rates?
Many local lenders make it a point to help you get a rate that fits your needs, especially if you can show them numbers from shopping around. But their access to investors may be limited, which in turn may limit the savings options they can pass on to you.
Better Mortgage has developed strong relationships with dozens of investors, ranging from Fannie Mae to most of the largest banks and insurance companies in America. And our technology instantly matches your attributes to investor demand and delivers a price that works for you, in a way that local lenders may find difficult.
Ask your local lender:
- For a Loan Estimate. After you provide your lender your name, income, and Social Security number, along with some information about the property you're looking to purchase, they're required to give you a Loan Estimate. This standard 3-page document breaks down the complete costs of your mortgage.
- If they have a rate match program. Your local lender may not offer the most competitive mortgage rates around, but if you find a lower rate elsewhere, they may be able to match it. Keep in mind: As little as 0.25% difference in your interest rate can translate to thousands of dollars saved over the life of your loan.
- If they have lender fees—such as origination fees, application fees, or underwriting fees. Some lenders charge their customers for simply choosing to do business with them in the first place. These kinds of lender fees can run as high as 2% of your loan amount—which can really add to the total cost of your mortgage. (We don’t like lender fees, so we don’t charge them.)
- The average cost of appraisals across their loans. Nearly all lenders charge a fee to appraise the home you’re looking to purchase or refinance. However, the cost of this service can fluctuate from lender to lender. We recommend you get your local lender’s appraisal fee in writing if you can. Ours is $550.
Better rates and affordability
- We can offer competitive rates because we’ve killed commissions, developed relationships with a range of reputable investors, and streamlined clunky processes, we can pass the savings to you.
- We don’t charge lender fees. With most mortgage lenders, closing fees comprise both lender fees and third-party fees. Better Mortgage does not charge lender fees, so there are no loan officer commissions, lender origination fees, application fees, or underwriting fees. Our investors pay us a one-time fee when they purchase the loan.
- We work to keep third-party fees down. When “surge pricing” is necessary to complete an appraisal even faster (anywhere from $550–$1500 for a quick turnaround time), we absorb those costs to make sure our borrowers are never charged more than $550. If your appraisal ends up costing less than $550, we’ll refund you the difference at closing.
Do you care about transparency?
This is a big one, and we can’t speak to the practices of your specific lender.
Ask your local lender:
- What is your relationship with the title firm? It’s always worth finding out how your lender is connected to the title firm and if they earn any kind of compensation for referring their customers., you may be able to find a better deal if you shop around on your own.
- How much do your loan officers earn in commission? Many lenders compensate their loan officers with a commission structure that can be around 1% of your total loan amount. Aside from the added cost to your bottom line, these kinds of policies may incentivize your loan officer to upsell you on products and services you don’t really need.
- How do you keep your customers in the loop during the underwriting process? It can take an underwriter anywhere from a few days to a few weeks to determine whether or not you’re approved for a mortgage. Any holdups are usually because the underwriter needs some additional documentation—so it always helps if they’re proactive about reaching out.
Better Mortgage transparency
- Financial transparency: A less-reliable loan officer may be incentivized by shady commission structures, mutually beneficial relationships with real estate agents, or other third-party relationships. At Better Mortgage, we’ve eliminated commissions and done our best to absorb fluctuations in third-party costs, passing the savings to you (like with the appraisal panels mentioned above). That means no “hidden fees” or surprise costs when it comes to closing.
- Process transparency: When it comes to transparency throughout the underwriting process, a local lender may not have the technology or bandwidth to keep you completely up to date during that crucial closing period.
- Timely transparency: Our online mortgage process also means that you (and your agent, should you choose to share) can get real-time updates on any information we may need from you to keep your loan process moving along. Our loan and underwriting teams are also available to give you updates on the status and expected timeline of your loan by email, phone, or text—whatever works best for you.
Do you care about face-to-face interactions?
This is one area where a local lender can beat Better Mortgage. If having face-to-face interactions is as important to you as speed and transparency, then a personally referred local lender may be the right option for you.
Get the benefits of a local lender with a national lender
Going with a local lender can be a good option for people who want that extra hand-holding through their homebuying or refinance journey. A personally referred lender who is more personable and dedicated than a big bank can be appealing, especially if an in-person relationship is your top criteria. With that said, we believe our innovative online process paired with our helpful and responsive non-commissioned Mortgage Experts can ensure the same peace of mind. With our technology working around the clock and underwriters in multiple time zones, we can run the numbers and let you know about any change in the status of your loan instantly. Instead of spending time “selling” other customers or realtors, our dedicated non-commissioned Loan Consultants are available to help via text, phone, or email.
If you're not getting the answers you want, let's talk
We're not interested in commission or selling you on things you don't need. Our mission is to make homeownership more accessible—and transparent—for everyone. Get started with a pre-approval in as little as 3 minutes, and if you like what you see, we can take it from there.