I was able to do way, way better by going with a local bank, as did my friends.
The only thing I can figure is they are better for folks with "good" (not "excellent") credit and can maybe close the loan faster.
If you have a good working relationship that you can used for good terms, then go for it. But don’t go with a local bank because you think you’ll continue to work with them.
All that said, our local CU does in fact keep their own mortgage portfolio. This may be rare, I don't know. They're a large CU associated with a government contractor.
When I bought my house they had the best deal (rate + closing costs) hands down. When I refinanced they were no longer offering 30yr loans on their portfolio (and I wasn't interested in 10/15), but still were originating them to sell. Unfortunately the 30yr rates were not as quite good as I could get elsewhere and closing costs were close to a wash so I went another direction.
I had a loan that got passed around a number of times back in the day, ending up with Countrywide each time.
Dealing with the local credit union was super easy for everything. Not that HSBC was bad, but the credit union was always local people to talk to and never any problems.
That said, they were phenomenal during the whole origination process, and they gave us a rock bottom rate (2.375%).
My only fear is servicing being transferred multiple times, rapidly, then having to decipher who to pay now.
Credit Unions tend to be different (at least the 3 I'm a member of, maybe this is not universal) in keeping loans in-house.
The banks will indeed most likely sell off the loan as soon as it's done.
Not that it matters either way.
Some places sell off the loan and the servicing, that's more annoying.
When I looked into it they wouldn't do jumbo loans (which is just anything slightly above the median home price in the state of California these days) and their rates on traditional loans were worse than the big bank I was comparing it to.
On top of that it's not even an automated tech solution like they pretend it is, it seems to be just a thin veneer of a shiny website that then connects you to a traditional lender. So it's not even really any more convenient in terms of submitting paperwork and stuff, at least for the initial quote that was my experience.
If not for that I'd have preferred someone local, you could tell you were just a number over there, and there were a bunch of communication issues around scheduling the appraisal that were annoying to sort out.
My local rates were over 3% for a 15 year, they got me 2.25% + .25% in points.
Despite that bad start, I was very happy with how they serviced the loan. They didn't play any games or make things harder than it needed to be. If you sent in extra money they both applied it to the principle immediately, and pushed your next payment date out accordingly (and cumulatively), so you could retroactively treat it as a prepayment if something came up. This was really nice, and none of my other mortgages have done both - the better ones automatically applied it to the principle, and the worse ones treated it as prepayment unless you jumped through hoops to inform them otherwise each payment. I did end up taking advantage of this to help get through some unexpected medical expenses.
Paying off the loan was also trivial - just sent in the last payment and the loan was done and they sent me the necessary documentation. That is how all my car loans have worked, but for some reason previous mortgages have required some extra steps for the final payoff, or the mortgage ends up in some weird purgatory state.