Since the dot-com boom of the late 1990s, online mortgage companies have become an increasingly significant force in the home loan industry. Leading the charge is Quicken Loans, now the largest retail mortgage lender in the country.
Does the growth of players like Quicken Loans, which offers an automated approval process through its Rocket Mortgage platform, mean web-based firms have more to offer than your community bank down the street? Not necessarily. Where you go for a loan is largely a matter of what’s comfortable for you—and where you can get the best rates.
Both types of lenders offer mortgage pre-approval: Being pre-approved can sometimes help you have your offer on a home accepted. However, they have other significant differences that could shape which one you find preferable.
Advantages of Quicken Loans
Going with an online lender has certain benefits, especially if you’re someone who likes to feel in control of the loan process. The advantages of going with a company such as Quicken Loans include:
- Convenience – Since the advent of the Internet, Americans are used to doing things on their own timetable. With lenders like Quicken Loans, you can start the process by chatting online or talking on the phone. And by using its Rocket Mortgage offering, you can apply for a loan over the Internet any time of day. Going with a digital lending solution is especially handy for those who work long hours and have trouble finding time for personal projects during traditional business hours.
- Speed – The company boasts that Rocket Mortgage users can get approved for a loan in as little as eight minutes, after plugging in some personal information on a computer or mobile device. There's no need to upload documents manually.
- Anonymity – Some people prefer to meet with their lender face-to-face, but that’s not true for everyone. In fact, many customers like the anonymity of electronic communication, which sometimes makes it easier to open up about one’s financial situation.
- Selection – Bigger mortgage companies often provide a broader menu of financial products. Quicken Loans is no exception. In addition to conventional fixed- and adjustable-rate mortgages, the company also offers specialized products such as Federal Housing Administration (FHA) and VA loans. Of course, some community banks offer these as well – but it’s not always the case.
The Benefits of a Local Bank
When it comes to big financial decisions, some people just feel more at ease doing business in person. With Quicken Loans, you’re talking to someone working out of a call center that might be in a different part of the country. If you’re the type of individual who likes to look people in the eye when getting advice, a local lender might be the best way to go.
Other advantages of going with a brick-and-mortar provider include:
- Local expertise and connections – Smaller banks argue that there’s an advantage to working with people who know the area and sometimes have an existing relationship with the realtor. This can put them in a better position to resolve conflicts during the loan approval process. That’s not to say Quicken Loans doesn’t do well by its customers. In fact, the company has earned J.D. Power’s top spot for customer service an impressive nine years in a row (2010-2018).
- Simplicity – Most people lead busy lives, so there’s something to be said for eliminating as many hassles as possible. For example, if you apply for a mortgage at your local bank, you might have the opportunity to manage all your accounts using a single log-in. That can make paying your monthly bill easier, too.
- Local ties – When you make payments to a nearby bank, there’s a good chance it will take that money and lend it to other individuals and businesses in the area. Smaller banks also tend to support local events and charities, thus bolstering the local community.
The Bottom Line
In recent years, online lender Quicken Loans has become known for convenience and strong customer service. But if meeting with lenders face-to-face is important to you, a local bank with a good reputation is a sound choice. For background when considering both alternatives, read Mortgage Basics.