Building a Relationship with a Bank
There was a time when building a relationship with a lender started with savings accounts, Christmas clubs, and checking accounts. Banks were far more community oriented, and good credit behavior combined with good customer behavior usually added up to a better chance of qualifying for a mortgage. Of course, more than a generation ago, banking deregulation hadn't opened up the market for the lending of home-buying funds to other intermediaries, as you'll see in succeeding chapters.
In the last thirty years, however, organizations other than commercial banks have been allowed into the marketplace, giving traditional banks considerable competition. These days, someone who gets a mortgage at a bank typically represents the higher echelon of credit — people who carry credit ratings of 700 or higher, also known as prime borrowers. Banks will do business in adjustable-rate mortgages, but they're still the largest destination for fixed-rate fifteen- and thirty-year loans.
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Though banks are federally required to make loans anywhere they take deposits, and that often includes low-income areas, increasingly banks are homes for the most creditworthy customers in the home loan market. Since mortgage bankers tend to lean more heavily on conventional loan products than on riskier loans to people with lower-quality credit histories, they have generally escaped the tough times that have faced many U.S. lenders during the post-2006 real estate slowdown.
If you have had your checking or savings account at a particular bank for years, that may be the best place to start in your investigation of loan opportunities. Make an appointment to talk to your branch's loan officer and start the question-and-answer process.
If you fear lending discrimination, a good first step to study procedures for appeal and complaint is the HUD Web site. Here's the address:
Some people say there is not much difference between dealing with mortgage bankers and mortgage brokers, and in many ways that might be true. But the one thing you need to scrutinize at both choices is the various fees you'll be charged to complete a loan. Knowing the interest rate you'll be charged is one thing. Make sure you understand precisely what you'll be paying for the loan at the bank.
