Rocket Mortgage vs. Your Local Bank for Mortgage Loans: An Overview
Online mortgage lenders have grown to be a major factor in the home loan market since the dot-com boom of the late 1990s. Rocket Mortgage, now the biggest retail mortgage lender in the nation, is leading the effort. Prior to May 2021, Rocket Mortgage was known as Quicken Loans, but it changed its name to better reflect that of its parent business, Rocket Companies.
Does the rise of companies like Rocket Mortgage, whose platform offers an automated approval procedure, imply that web-based businesses have more to offer than your neighborhood bank? No, not always. Where you apply for a loan mostly depends on your comfort level and where the greatest rates are available.
Mortgage pre-approval is offered by both types of lenders. Having your offer accepted for a house often depends on being pre-approved. There are substantial distinctions between both that may influence your choice of one over the other, however.
- Rocket Mortgage, an online lender, has recently gained a reputation for ease and excellent customer support.
- A local bank with a solid reputation is a wise option if dealing with lenders in person is crucial to you.
- Local banks could also provide more favorable terms or cheaper costs than can internet choices.
- Mortgage pre-approval is offered by both types of lenders.
Investopedia / Sabrina Jiang
Selecting an online lender has several advantages, particularly if you want to feel in charge of the loan application process. Going with a business like Rocket Mortgage has certain benefits.
- Convenience: Thanks to the internet, Americans are used to working at their own pace. You may start the process by conversing online or over the phone with lenders like Rocket Mortgage. Additionally, you may use Rocket Mortgage to submit an online loan application at any time of day. Choosing a digital loan solution may be particularly helpful for those who put in a lot of overtime and struggle to find time for personal projects during regular office hours.
- Speed: The business formerly claimed that Rocket Mortgage consumers may fill out basic personal information on a computer or mobile device and get loan approval in as little as eight minutes. Manual document uploading is not required.
- Anonymity: Although not everyone like to meet with their lenders in person, some do. In fact, a lot of clients like how anonymous email may be, which can sometimes make it simpler to be honest about one’s financial status.
- Larger mortgage businesses often provide a wider selection of financial solutions. Not an exception is Rocket Mortgage. The firm provides specialty products including Federal Housing Administration (FHA) and Veterans Administration (VA) loans in addition to traditional fixed- and adjustable-rate mortgages. Yes, some community banks do provide them as well, although not always.
If you choose an online lender like Rocket Mortgage, your loan will almost always be sold to another business for service once it closes. This implies that you won’t be able to choose which business will ultimately retain your mortgage or to whom you’ll be paying payments. Despite the fact that some local banks do sell mortgages to outside firms for servicing, the possibility of this occurring is far smaller than with an internet lender, where it is almost guaranteed.
A Local Bank
When it comes to big financial decisions, some people just feel more at ease doing business in person. With Rocket Mortgage, you are talking to someone working out of a call center that might be in a different part of the country.
If you are the type of person who likes to look people in the eye and shake hands 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 knowledge and connections: Smaller banks contend that dealing with local experts who sometimes already have a relationship with the real estate agent is advantageous. They may be in a better position to settle disputes throughout the loan approval process as a result. That is not to imply that Rocket Mortgage doesn’t treat its clients properly. In fact, the business has achieved the highest ranking for customer satisfaction from J.D. Power for the ninth consecutive year.
- Simplicity: Since most individuals have busy lifestyles, it makes sense to cut out as many headaches as you can. You may be able to manage all of your accounts with a single login, for instance, if you apply for a mortgage at your local bank. That may also make it simpler for you to pay your monthly fee.
- Local ties: There is a significant probability that the bank where you make your payments will take your funds and lend them to surrounding residents and companies. Additionally, smaller banks often donate to regional causes and activities, strengthening the neighborhood.
Comparing RequirementsRocket Mortgage
Credit scores fair or above (as low as 500 for certain loans) (as low as 500 for certain loans)and down payments
Debt-to-income ratio of 50% or less
2+ years of verifiable income history
Property can be a single-family, multifamily, investment, or other non-traditional mortgage type
Borrower can live (almost) anywhere
Down payments as low as 0% depending on loan type, credit score, etc.
Credit scores good or above (varies)
Debt-to-income ratio of 40% or less (varies)
2+ years of verifiable income history
Property in the bank’s service region must be a single-family house intended to be used as a main residence (varies).
Typically, the borrower must reside close to the bank in a certain location.
Down payments above 10% (varies)
In comparison to the typical local bank, Rocket Mortgage provides a far larger selection of loan packages and has much more flexible standards. Even if it may be easy to locate a local bank that may accommodate your specific scenario, plan to do further research.
Is Rocket Mortgage the Same as Quicken?
Yes. Quicken Loans was the previous name of Rocket Mortgage. To better align with the name of its parent business, Rocket Companies, the corporate name was changed in May 2021.
Is Rocket Mortgage a Broker or a Lender?
One of the biggest mortgage providers in the United States, Rocket Mortgage provides a variety of buy and refinancing alternatives. It is a lender online.
What Bank Is Behind Rocket Mortgage?
Rocket Mortgage, an online mortgage provider, is managed by parent business Rocket Companies rather than a bank.
The Bottom Line
No matter which lender you select—a regional bank or an internet service like Rocket Mortgage—it is always a good idea to search around for the best rates. Businesses like Rocket Mortgage are able to service a larger range of customers and provide more goods.
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