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Advantages of Local Banks vs. National Lenders

Keeping your financing close to home can have advantages.

Written by Adam Headley

 Photo: Eric Muhr / Unsplash
The wave of mergers in the banking industry continues — big regional and money center banks getting bigger, sometimes swallowing up smaller competitors.  At first glance, it may not mean much to the consumer, but when it comes to financing a log or timber home, utilizing a locally owned and operated bank may make all the difference.
Local banks employ decision makers who live in the market.  They’re usually familiar with site details specific to their locations, land development trends, economic conditions and, most importantly, the demand for log and timber financing in their trade areas.
One size doesn’t necessarily fit all in the community bank environment either.  Local bankers take the time to analyze a lending opportunity more thoroughly when necessary, offering solutions to get the deal done.  Oh, sure, rules apply.  Stable income, good credit and enough cash to put equity in the deal and buy groceries after the bills are paid still matter to the local lender.
However, when the circumstances are a bit outside the box and policies need to be tweaked or exceptions made, local bankers may provide the best financing option with the least hassle. Why? They understand the dynamics of a local deal.  Often they are more flexible, making things happen more quickly than national bank rivals.  But be prepared to pay a little more in rates and fees for the easier path to closing.
It’s true that big national lenders also can provide quality service, pushing lots of log and timber home loans across the finish line. In fact, some major national institutions, such as Citizens Bank, and large regional lenders like M&T Bank, maintain “systems-built” divisions (log and timber homes fall within this housing category), so they understand the idiosyncrasies of financing these types of homes. Still, it’s a guarantee that the bigger the bank and the more distant the decision maker, the more rigid its policies and procedures are likely to be, even though pricing may be more attractive.
The bottom line: Explore all of your options and make an informed decision.  For log and timber home buyers, the local lender often leads to a more satisfying experience.

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