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Key takeaways

  • National mortgage lenders provide home loans nationwide and tend to offer a variety of options, but may lack personalized service and charge higher costs.
  • Local mortgage lenders finance properties in a specific geographic location and often provide more personalized service, but may have limited loan options.
  • When choosing a lender, consider factors such as customer service, the type of loan you need and interest rates.

Deciding which mortgage lender to choose can be a daunting task, especially with the many options available. One of the key decisions to make is whether to go with a national or local lender. Here, we’ll break down the differences between national and local mortgage lenders and provide insights into which might be the best fit for you.

National vs. local mortgage lenders

National lenders

  • Available nationwide
  • Often a big bank or online lender
  • Typically offer a variety of mortgage options
  • Service might be less personalized

Local lenders

  • Finance mortgages within a specific geographic region
  • Often a community or local bank or credit union
  • Known for more personalized experience
  • Might not offer many home loan products

National lenders

A national mortgage lender works with qualified borrowers throughout the country. It might be an independent entity or a large bank providing a wide variety of home loan services. Examples of national lenders include Rocket Mortgage, Bank of America and U.S. Bank.

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Pros

  • Extensive range of loan options
  • Offer mortgages to qualified individuals nationwide
  • More likely to have extended customer service hours and more online features
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Cons

  • Might not get the personal touch that local lenders offer, as you're likely to be one of many borrowers
  • Potential for more fees than local lenders, resulting in higher interest rates or closing costs
  • Emphasis on handling large volumes of loans might make them less flexible when providing tailored solutions to clients

Local lenders

Local mortgage lenders only finance home purchases within a specific geographic region. Known for their personalized service, the loan officers at these lenders have a deep understanding of the local housing market, which enables them to offer tailored loan programs for first-time homebuyers or those with complex financial circumstances. Working with a local lender means you can enjoy direct, face-to-face communication with loan officers who are part of the same community. Examples of local lenders include a credit union or community bank.

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Pros

  • More personalized service allows you to interact directly with industry professionals and potentially get a deal more tailored to your financial situation
  • Loan officers have knowledge of the local housing market
  • Often offer lower interest rates than national lenders
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Cons

  • Only operate within certain geographic areas, which won’t work if you're moving from elsewhere
  • Might not have as diverse a range of loan options as their national counterparts
  • Might not have the same extended customer service hours as a national lender

National vs. local lenders: Which is right for me?

Choosing between a national and local mortgage lender depends on several key factors. If you prefer a more personal touch and insight into the local market, a local lender could be the right choice for you. However, if you value a wide range of loan options and broad accessibility, a national lender might be more suitable. To make the decision, evaluate your need for personal interaction, compare 30-year mortgage rates and reviews and consider the type of loan you need. Then, reach out to potential lenders to gauge their responsiveness and level of service.

Frequently asked questions

  • Credit unions are one option when taking out a mortgage. A credit union is a nonprofit financial institution controlled by its members and typically offers lower mortgage rates. However, at a credit union, you might only have access to a limited line of loan products, meaning you might not find exactly what you’re looking for. Plus, you’ll need to qualify for membership. That member-focused experience, though, could lead to more case-by-case flexibility that can help you with your mortgage needs.
  • An online mortgage lender allows you to move through the loan application process with an entirely (or almost entirely) digital experience. They often process applications in days and offer preapprovals within hours. They’re also worth considering if you want to take advantage of lower rates or fewer fees — their lack of overhead means lower costs and savings they pass on to you.

    Convenience, cost and speed matter, but you might also need or want human interaction at some point in the process. With no branch locations, this can be difficult to come by with an online lender. You may or may not have an individual loan officer assigned to you and, since they could be anywhere in the country, they may be hard to reach at times. In short, they’re not ideal if you crave a face-to-face, personal touch.

Next steps on finding the best mortgage lender

When searching for the best lender — either a national lender or local lender — cost is important, but so are your needs and preferences. Some ways to narrow down your options include:

  • Consider your credit. If your credit score could use improving, look into lenders who have options for low-credit score borrowers or those who don’t fit the standard financial profile.
  • Compare quotes from multiple lenders. Studies show that shopping around for a mortgage could save you thousands.
  • Pay attention to how lenders communicate with you. The right lender shouldn’t be difficult to work with. The best lenders are able to answer your questions promptly, be easy to reach and keep you updated throughout the process. The right lender won’t hit you with a hard pitch, either.
  • Weigh the lender fees. Many lenders charge an origination fee and an application fee, to name just a few. Or they bump these charges up, to compensate for “discounts” elsewhere. Take this into account when shopping around and comparing offers.