Don’t dismiss small lenders when mortgage shopping, experts say

There are many dilemmas when buying a house, such as where to get the money to fund your dream. Do you go for a mortgage with a better rate from a lesser-known bank, or one with a higher rate from a household name?

• Small vs. big bank: “The larger banks must adhere to different lending requirements, particularly after the financial crisis. Small lenders can approve mortgages rejected by larger banks, because their guidelines and criteria differ. They may approve borrowers who don’t qualify elsewhere, like someone with a low credit score due to a one-off historical event, but who has enough liquid assets and income to support mortgage payments,” says Chrisoula Papoutsakis, an agent with Triplemint, a real estate broker in Manhattan.

Andrew Weinberg, principal with Silver Fin Capital Group in Great Neck, says some people get hung up on working with a big bank, rather than a small broker, and accept a higher rate from a big bank. “That can be a bad financial decision. Paying more over the life of your loan just to work with Wells Fargo or Chase doesn’t seem worth it.”

Similarly, Warren Goldberg, president of Mortgage Wealth Advisors in Plainview, says, “I find borrowers consistently have a smoother, faster, and less stressful experience working with small, local companies than with the mega-banks.” They may find lower rates too.

• Explore credit unions: Don’t dismiss credit unions. Says Theresa Williams-Barrett, vice president of consumer lending and loan administration at Affinity Federal Credit Union in Basking Ridge, New Jersey, “Credit unions can offer more competitive rates and lower fees . . . than mortgage lenders or big banks.”

An earlier version of this article misstated the name of Silver Fin Capital Group.