Mortgage lender question

Inkogneetoh

H and I have found a home, have an accepted offer and signed P&S.  Rates all of a sudden went up in the past 2 months so instead of 3.5% it's 4.5% at the bank we got our pre-approval from.  I went to military.com and filled out some info and found an out of state bank that will give us a rate of 4.125%, saving us about $60/month on our payments.  They're origination fee is much higher ($649 vs. $130 with the original bank) but obviously that's short term.

My question is does anyone have experience with out of state lenders?  Should we try and find a local lender?  Does it really matter in the long run if we're getting a better rate?

We're first time home buyers as well and I keep reading online not to use an out of state lender.  We need to make a decision today on what lender we want to use.

ETA: I forgot to mention it's a VA loan so we do seem to be limited on in state lenders as well.  Not a lot of banks offer them. 

MrsS728

My husband and I are closing on our first home in 3 weeks (this has been a 3+ month wait) and we are also using a VA loan. We were able to lock in our interest rate (at 3.5%) in May just before it sky rocketed (and it's going to do it again!). Check to see if you can lock it the rate before it goes up again. We found that some banks tried to discourage us from using the VA loan because they lose money, it's a lot more paperwork, and they lose PMI (We had 17% down for our home). We spoke with a mortgage lender (not a commercial bank like Bank of America or KEYBank) and found out that we were being deceived. Also, find a lender that has an underwriter in-house. The process was SO much smoother and quicker. We had a commitment letter within 2 1/2 weeks. We never considered going out of state, but did shop around quite a bit.  Good Luck!!