Technology and instant communication today provide potential borrowers an endless number of options to field offers on their home purchase or investment project loan. Internet aggregators and marketplaces like LendingTree and QuickenLoans have turned the pre-qualification process into a seconds-long process yielding sometimes hundreds of options. The internet has also allowed lenders across the country to be able to originate loans from anywhere, naturally creating lower rates for borrowers with the additional competition. This has created an environment that is the most borrower friendly since before 2008.
With the amount of options and competition, however, there are still obvious advantages to searching within a local radius for a lender close to home:
A local lender comes with local knowledge
Choosing a lender close to home allows you to tap into their local knowledge and resources. Many hard-money lenders and community banks also work directly with contractors, material retailers, and other logistics providers in the area. This dearth of knowledge is something you will not get from an institutional lender or out-of-state financier.
A more personalized experience
Knowing where your loan officer's office is located and having the potential to see them around town is something that, while difficult to quantify, is an invaluable asset to the borrower. Familiarity breeds comfort between both parties, which could help you save money in the long run. Many local lenders offer discounts to repeat customers over the course of several projects or purchases. It's imperative you have a mortgage broker on your side who understands how to tap into these relationships to get you the best deal.
Greater flexibility, less waiting around
Processing times are significantly lower when dealing with a direct lender or community bank if only based on the fact that the volume of loans being processed is far less than a national bank or lender. This also leads naturally to less processing time or waiting for draw requests to be fulfilled. We'll spare you the "time is money" cliche. This direct line of access between lender/borrower also opens up opportunities to work with one another to ensure the borrower is getting the best possible outcome from the loan. This often times comes down to the abilities of your mortgage representative in working with the lender.
In finality, choosing your mortgage provider is the most important decision in the home-buying or investment process. A strained relationship between borrower and lender can sour a deal overnight, leading to lower margins and lost capital. Be sure that you know all of your options and entrust your loan to a broker who knows how to get every last incentive for you from the right lenders.