Financing - Big Bank vs Small Bank

[Ross Miller]

I am a new investor looking to purchase my first single family property.  Me and the property owner have made a verbal agreement on price, thus my next step is financing.

I contacted several banks in my area big and small to compare rates for a conventional mortgage.  The big banks seem to offer lower fixed interest rates, the small bank seems to be ~1 percent apr higher and is only fixed for 5 years.  I want to support the local bank for the increased flexibility and responsiveness, but I don't want to over pay.  So right now I am leaning toward the big bank, but I am concerned that they may appraise the property more harshly which could default the loan

The property is a turn-key deal with tenants living there for the past 5 years, and no plans to move.  I had a home inspector look over the property and there are some areas of concern in the 'M=Marginal' category, but none in the 'D=Defective'.  One thing that concerns me is a visible crack in the foundation on the outside of the house.  The home inspection report says 'the crack should be filled in and monitored for possible future maintenance', so maybe it isn't a big deal, but would this be something that could cause a large bank appraiser to default on the loan?  I can attach the home inspectors report if needed.

Let me know what you guys think regarding choosing the lower cost big bank or the higher priced, more flexible local bank.  And do you think this crack may be a potential big problem with obtaining financing through either bank?

Thank you everyone! This looks like an amazing community that I hope to contribute to as I embark on my real estate investing journey.

[Cameron Davis]

It is my understanding that the appraisers don't work for the banks. They are sort of randomly assigned to do appraisals... a law that was created after the housing crash. Sorry, but I don't know enough to give further advice on your post. My opinion? I'd go with the better value, but I wouldn't like a 5-year fixed rate unless I was SURE that I wouldn't hold the property longer than that. I suggest getting at least one more quote... they are free and quick.