Online Lenders Versus Local Lenders: What’s the Difference?

What are the Benefits of Owning a Home Versus Renting
March 18, 2019

Things have changed a lot in the mortgage industry in the past ten years. When once you had to go down to your local bank in person to apply for a loan, now you can do it online from the comfort of your easy chair. In a world where convenience is just a click away, it may be tempting to apply for a loan online, but do you really know who you’re dealing with and what they’re doing with your information? Sometimes security is more important than convenience, and with a home mortgage, that’s usually the case. There are some major benefits to using a local lender versus an online lender.


Online vendors have a reputation for passing your file around from one person to the next. You don’t know if your application is in the hands of an intern or a seasoned veteran in the business. It’s entirely too easy for an online lender who doesn’t truly care if you get a loan or not, to accidentally misplace your file, or move it to the bottom of the stack, especially if it requires a little extra effort. They aren’t your neighbor. You aren’t going to accidentally bump into them at the grocery store, so there’s no need for accountability.


More than likely, over the next few decades, you might want more than one loan. Your local lender should become as important to you as your tax adviser or doctor. Over time, as your relationship strengthens, getting approved for a loan should get easier and easier. They won’t require the same information all over again. Instead, they may just ask for any changes to your employment or home address. They’ll recognize your voice when you call and greet you by name. Forming a relationship feels much better than just being treated like a bunch of digits on a computer screen.


Perhaps the best part of using a local lender, versus an online lender, is the trust that grows over time. Trust is a two-way street. You trust them to work hard for you and get you the best possible terms. They trust you to be honest and provide any needed documentation. You both have to work together to achieve the same desired result, approval for a new loan. You’ll never establish that level of trust over the internet when you can’t look each other in the eyes.

Privacy and Security

Privacy and security are also critical to the loan application process. It seems like almost weekly we hear about another major data hacking and consumer’s having their precious personal information fall into the hands of identity thieves. When you apply online, how do you know your data is secure? Your trusted local lender is going to work harder to protect your information because their reputation depends on it.

Applying for a loan shouldn’t be as easy as ordering a pizza on your smartphone. It’s a big step and should be approached with thoughtfulness. Take the time to research local lenders and find one that makes you feel comfortable and will work diligently to be your champion.

Note: Opinions expressed are solely my own and do not express the views of my employer.