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New research from Ohio State University suggests that homeowners who obtain home loans from local mortgage lenders are less likely to default than those who borrow from more distant banks.
The researchers noted that even if two similar homeowners received the same type of mortgage with the same interest rate, the borrower who went with the local bank might be better off.
“The door you walk into when you’re looking for a loan matters a lot,” said Stephanie Moulton, assistant professor in the John Glenn School of Public Affairs at Ohio State University, in a statement.
“Local banks seem to offer some protection to homebuyers, particularly those with low incomes who may be seen as risky borrowers.”
Moulton attributed the phenomenon to more prudent underwriting at local banks, who tend to look at income and employment history more closely to ensure borrowers can actually make their mortgage payments.
“Many mortgage brokers base their decisions on whether to offer a mortgage on one or more key numbers, such as a credit score,” she added.
“In other words, if your credit score is above a certain level, and you meet other criteria, the broker will offer the loan. The same may be true of large, non-local banks.”
But local banks and lenders typically have established relationships with their borrowers, including checking/savings accounts, so they know more about those being extended home loans.
Many of these local banks also get their borrowers to set-up automatic mortgage payments, which could lead to a lower default rate.
All that said, you should always shop around to find the best mortgage rates!
If you are new to the area and need recommendations on a bank, give me a call. I will be glad to help. You may also call my loan officer Roland Benson at 916-768-1578 for any questions you may have in regards to your qualifications and your home loan options.
Mortgage industry after April of 2011
I believe the answer to that, would be for the mortgage brokers and mortgage bankers to give more then what the big banks are giving to the public and to the real estate industry. It’s a simple philosophy give and you will get much more in return. We have set our path for 2011 strategy and the execution of our strategy will begin in January 15th of 2011. Our strategy will create opportunities for real estate agents to have more business and develop for them a strategy for continuous growth in return to have a massive bonding strategy between the real estate agents in our market with our loan officers in exchange for the value that is provided by the services and the strategies we bring to our industry. All we would like to ask for the loan officers, the mortgage brokers and mortgage bankers that are in the industry and they are facing some financial trouble or facing frustration of growth and development for their office or their company to join us on Facebook and join our company so we could put our hands together and promote what banks can’t promote, give the public and the real estate industry something that has never been provided and asking nothing in return.
Our formula for success in 2011 is the way of conquering markets, it’s the new way to conquer this industry lets come together and turn this industry to our benefit and show the banks how hard it is going to be for them when we are taking their business away, and how much this industry is in a need for our breed of professionals.
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