1. Your local bank only deals with prime loans. They do not take the risk on risky mortgages mainly because they do not have the additional investors that larger financial institutions have.
2. Your local bank or credit union will more than likely hold onto the mortgage note rather than sell it in bundles like large mortgage companies.
3. Since your local bank or credit union holds onto the note and collects the interest off of the mortgage they are able to offer rates lower than a mortgage broker or correspondant lender. The rates are not that much lower but .125% -.25% over 30 years adds up.
4. If times become tough your local bank has a little bit more flexibility to possibly work with you in trying to redo loans. Whatever happens in the local community will affect them so its better to work something out than to have the bank go under too.
5. You already keep all of your checking and savings accounts there already so they value your business and want to keep you there. This will ensure that you are not a one and done mortgage transaction.
6. A large mortgage broker has no risk involved in doing your loan because they sell the loan within 30 days of closing. What happens is the loan will usually make them a 2% profit. For example a $100k loan x 2% =$2000 revenue for the company. They turn and sell these loans with other loans making a quick profit and getting the mortgage note off of their books so if you default on the loan its not their problem anymore, its whoever bought the loan. So now you have to call up the current mortgage note holder not the original company you went through.
7. Most banks pay their employees a better salary than large mortgage brokers. This entails that they are not trying to steer you into a bad loan or adding more fees into the loan to make a bigger commission.
8. Local banks do not have as many fees as large mortgage brokers. The reason is because they are lending their own money and do not have to work with other companies. You can usually save $250-$500 on fees because they do not have to charge processing fees.
9. A Credit Union by definition is a place where individuals pool their money together and a management team watches that money instead of having to borow from a larger company. What this does is let each other borrow money for a mortgage at a lower rate than what the market is offering. The Credit Union pools all of its members money together to make the loan and holds onto the mortgage note making a nice return for the Credit Union.
10. Even though your local bank is probably owned by a larger holding company you would be supporting local jobs and job creation. The bank will earn interest on your loan which will let them offer favorable interest rates to small business owners. Plus, your local bank has so much rising on the community that it will want to see you enjoy working with them to ensure that you will come back.