Buying a home comes with a long list of decisions, and one of the biggest is figuring out where to get your mortgage. Should you go with a bank or a mortgage lender? It’s a question that doesn’t always have a clear-cut answer.
Some people prefer banks because they’re familiar, while others choose mortgage lenders for their flexibility. The truth is, both options have advantages and drawbacks, and the best choice depends on your financial situation, goals, and how quickly you want to close.
Before signing on the dotted line, it helps to know how banks and lenders compare.
Getting a Mortgage from a Bank
Banks handle a variety of financial services, including checking and savings accounts, credit cards, and personal loans. Mortgages are just one of the many products they offer. Because of that, their approach to home loans is different from a lender that specializes in mortgages.
Why Some Homebuyers Choose Banks
A bank can be a good option if you already have accounts with them. Some banks offer perks for existing customers, such as lower fees or discounted interest rates. If you like the idea of keeping all your financial accounts in one place, working with your bank may seem convenient.
Banks are also known for their stability. They’ve been around for a long time, have physical locations you can visit, and offer in-person service that some borrowers appreciate. If you prefer face-to-face meetings and direct access to a loan officer, a bank might be appealing.
The Drawbacks of Bank Mortgages
While banks can offer a sense of security, they also have some notable downsides. First, their mortgage approval process tends to be stricter.
Banks have rigid underwriting standards, meaning you’ll typically need a higher credit score, a steady income, and a lower debt-to-income ratio to qualify for a loan. If your financial situation is unique—such as being self-employed or having non-traditional income—a bank may not be as flexible.
Another issue is loan variety. Banks typically offer conventional mortgages, but they may not have as many government-backed or specialized loan programs. If you need an FHA or VA loan, for example, a bank’s options might be limited.
Then there’s the approval timeline. Banks tend to take longer to process mortgage applications. If you’re trying to close on a home quickly, delays in underwriting and approval can be frustrating. Some homebuyers lose out on competitive offers simply because the bank’s mortgage process is too slow.
For borrowers with excellent credit and straightforward financials, a bank might be a reasonable choice. But for those who need more flexibility or want a faster loan process, a mortgage lender could be the better option.
Getting a Mortgage from a Lender
Unlike banks, mortgage lenders focus exclusively on home loans. They don’t offer checking accounts or credit cards—they deal with mortgages all day, every day. That focus comes with some key benefits.
Why Mortgage Lenders Stand Out
One of the biggest advantages of working with a lender is the variety of loan options. Whether you need a conventional loan, an FHA loan, a VA loan, or a jumbo loan, a mortgage lender is more likely to have a program that fits your needs.
Some lenders even offer specialized loan products for unique financial situations, such as non-traditional income or lower credit scores.
Flexibility is another reason homebuyers turn to lenders. Because lenders work with multiple investors, they can offer more lenient approval criteria. If your credit score isn’t perfect or you have a higher debt-to-income ratio, a lender may be more willing to work with you than a bank.
Mortgage lenders also tend to move faster. Since they don’t have the same bureaucratic structure as banks, they can process applications more quickly.
If time is a factor—such as in a competitive housing market—working with a lender can help you close sooner and avoid losing out to other buyers.
The Downsides of Mortgage Lenders
While lenders offer many advantages, there are a few things to consider. Unlike banks, mortgage lenders don’t provide other financial services. That means you won’t be able to bundle your mortgage with a checking or savings account.
Additionally, some lenders sell their loans after closing. This doesn’t affect the terms of your mortgage, but it does mean you may have to make payments to a different loan servicer. Some borrowers find this inconvenient, especially if they prefer consistency.
If you’re looking for a more streamlined loan process, access to a variety of mortgage programs, and greater flexibility in approval criteria, a mortgage lender is usually the better choice.
Is It Better to Get a Mortgage from a Bank or Lender?
So, is it better to get a mortgage from a bank or lender? It depends on what matters most to you. If you have excellent credit, a stable income, and want to keep all your finances in one place, a bank might work.
Some borrowers also like the idea of walking into a physical location and speaking with a loan officer face-to-face. But if you want more loan options, faster approval times, and greater flexibility, a mortgage lender is usually the smarter move.
They offer specialized programs, work with a wider range of borrowers, and can get you to the closing table more efficiently. The best way to decide? Compare offers.
Getting pre-approved with both a bank and a lender will give you a side-by-side look at interest rates, loan terms, and overall costs.
Why Working with a Mortgage Broker Like Penn Street Is a Smarter Move
Instead of choosing between a mortgage from a bank or lender, there’s another option—working with a mortgage broker. At Penn Street, we compare mortgage options from multiple lenders. It’s how we make sure you get the best possible terms.
So instead of being locked into one bank’s rigid requirements or a single lender’s limited offerings, you gain access to more choices and better deals. If you’re ready to find the right mortgage, let’s talk.
Whether you’re buying your first home, refinancing, or investing in real estate, we’ll make sure you get the best possible financing solution. Reach out today to get started.