When it comes to mortgage loans, what type of lenders do you prefer? Is it banks or nonbank lenders? If banks, is it big, midsize, or small scale? But, perhaps, you are curious why nonbank lenders are fast gaining acceptance?
If you want to go local but are debating between a nonbank lender or community bank for mortgage loans, columnists from amaricanbanker.com and newsone.com can help you pick the best for you.
From American Banker
American Banker columnist Kevin Tynan of Liberty Bank pointed out two key factors that make nonbank lenders popular among borrowers. These are the knowledge of borrowers and local conditions – two inherent strengths of mortgage business that these lenders now have mastered.
If you look closely, your community bank can offer the same and more. Try to inquire in your area and you’ll have a form that is nothing like the standardized lending criteria national and global banks use. The form asks basic profile information, including income, expenses, and assets. In the second part, that’s where you’ll provide a brief but clear description of your circumstances that affect your mortgage payment. Some even supply the reasons, and all you have to do is check those that apply to you.
That way, lenders can offer personalized solutions. While some nonbank lenders can also do this, they don’t offer it at low rates.
But are borrower relations and local knowledge enough? Tynan said no. If nonbank lenders have other attractive strengths such as digital technology and customer convenience, community banks’ come in a form of advocacy.
Yes, there are mission-oriented banks as exemplified in the Newsone article. To quote, “There’s also a certain type of community bank that is focused on developing the community around it: one that also has the designation of a community development financial institution or CDFI. Such institutions receive funds from the federal government to help in their mission to reach underserved people, promote local economic development and create jobs, promote homeownership and increase financial literacy in their communities.”
As a result, more local homeowners have avoided foreclosure. Many banked and underbanked community members have benefited from such services as well. The latter is because above-average poor, underbanked, and even banked members have access to these services at lower rates.
The more it gets the support of its community members, the more it is likely to provide such banking services and beyond like creating jobs. So are you in? Make sure first that your community bank is FDIC-insured. Then you’ll have peace of mind, all while giving back to your community.