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Applying for a mortgage: The pros and cons of community banks

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Community banks are independent and locally-owned financial institutions that are not affiliated with large financial institutions. The following are some pros and cons of applying for a mortgage at a community bank.


• Community banks don’t have to report their earnings to investors and instead, focus on serving their customers: homeowners, entrepreneurs, and farmers within their community. In contrast, big bank chains prioritize promoting the best interests of large businesses and corporations.
• Community banks aren’t just about the numbers. Apart from credit report and FICO scores, community bank officers often also consider personal character, family history, and individual circumstances when judging risk in the loan-making process.
• Community bank mortgage loans have faster processing times because all decisions are made locally and do not have to go through a loan-approval committee in another state.
• Many community banks specialize in home mortgage loans and small personal loans.
• Lower fees and competitive mortgage rates are a community bank staple.
• Community banks are typically customer-focused and provide personalized service.


• Limited locations. Community banks don’t have as many regional branches as big banks, so some areas might not have access to community banks.
• Community banks often have less than $1 billion in assets, which means they cannot grant very large loans.

Although megabanks offer more services, those looking for a good deal on a mortgage loan should consider going local and choosing a community-focused bank. Homebuyers should, however, scout around and speak with a few lenders and carefully weigh the pros and cons of each option before making a decision.

Steve Liefschultz, chairman and CEO of The Remada Company is well-versed in finance and real estate development an management. Follow this Twitter account for more related news and updates.