Bank Mortgage Rates

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Recently I used mortgage rate calculators to compare bank mortgage rates, particularly with mortgage rates that you can find online.

Local banks seemed to actually suffer somewhat, with rates that seemed to be (on average) .2-.5% greater than the rates from some online mortgage companies. I am a firm believer in exploring alternatives, but when it comes to mortgage interest rates it seems pretty straightforward to atleast explore some of the options from online lenders. That .2%-.5% might end up being a lot of money over the life of a 30 year loan, after all!



There are still some positives when working with a local bank that go beyond simple dollars and cents fundamentals. For example, a local bank will often have one or two loan officers that you have the option to work with exclusively at some local branch of the institution. This personalized assistance goes beyond a mere "toaster gift" thanking you for your business: very often they are highly skilled financial advisers and can help with other financial questions, even if they are not home-finance related. Even if on the basis of friendly advice only, it can (and often is) good financial advice when you speak with a banker directly. Furthermore, when you are dealing with a local bank, you will be building a relationship with that bank, and might be able to have better results with future loan requests based on your prior experience with that bank. You might be able to use your personal banking relationship to help negotiate lower bank mortgage rates, for example, or possibly the reduction or elimination of loan closing costs. Personal assistance is definitely on advantage to bank lending that you might not be able to find with online lending.

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On the other hand, online lending institutions are able to offer lower rates, but this is typically because they might not have the financial overhead that a standard "brick and mortar" type of bank or mortgage lending institution might have. This overhead is another expense for the normal mortgage bank, and therefore will be rolled into the overall cost of your loan. An online lender does not have these expenses, and with the lower cost typically associated with online advertising for local mortgages, an online mortgage lending company has the upper hand compared to bank mortgage rates. This advantage gives an online loan company a very high agility with advertising and loan services that a local bank may not have. The disadvantage is that they may not have the experience that a dedicated loan officer at a regular mortgage bank might have. Depending on the lending institution, you may end up calling a phone number, only to have the person on the other end of the line be an inexperienced rep, fresh out of the company's 2 week training course!

When deciding on bank mortgage rates, versus online lenders, it is important to consider service, as well as the home loan rates themselves. Typically, you can get the best mortgage rates from online lenders, but it is difficult to expect the price to come with a superior level of service.