Choosing Lender for 30 Year Mortgage - Big Bank or Local? Tips

[jjones1438]

DW and I just signed a contract on a house. We will be putting 20% down and will have a 30 year fixed rate, conventional loan.

We received a pre-approval letter from a local bank. Now that the contract is signed, I'm researching to try and get a better understanding of the local bank vs big bank / all other options. What would be some tips from the forum?

Other details: Excellent credit score, house price is $400K, located in Missouri, local bank quoting 3.75% fixed interest rate and said their typical closing fees end up around $2,500-$3,100 on the high side which includes an $800 origination fee (they said most banks charge $1K for this), a $450 appraisal fee, and I didn't get what the other components are written down during the call (will see once they send the docs).

Closing costs I presume will be in the same ballpark, I'm most interested in thinking through the terms of the loan on this loan vs others. Do most people just shop around? Does a mortgage broker make sense?

[Lucky Penny Acres]

We selected a local bank specifically because their policy was to hold the loan until maturity and not re-package it for transfer / sale to investors, other banks, etc. The financial crisis was closer in time and all of those bank robo-signing mortgage assignment schemes and banks foreclosing on the wrong houses due to poor record keeping were fresher in the news.

In addition, our view was that having the mortgage with a local bank is a greater asset to the area in which we live because the money stays in the area and helps the community more directly compared to a national bank.

Shop around - a mortgage broker isn't necessary but can speed up the process because of access to a greater number of lenders with less leg work. We just directly contacted a number of local banks on our own and selected the one we felt most comfortable with - it also happened to have the lowest overall rates when factoring in slightly lower closing costs.

[katsiki]

I would check around locally (and nationally if it were me).  Check any credit unions.  They are sometimes more competitive (in general).

Is the quoted rate the APR?

National company for comparison (quicken loans):


30-Year Fixed
3.75%
(4.024% APR)