Well, fortunately, many of the local lenders have preliminary applications and rates that you can complete on their websites. And it seems that all have the same rate, which is 3/8 % higher than the best rate we got from an online place. And that's nothing to sneeze at; even after you factor in the higher closing costs from the online place, we save something like $2k of interest (after the tax deduction) with the lower rate after 5 years, and more if we keep the house for longer.
My guess is that the local banks compete against each other, but not as much against Internet lenders, since most people are willing to pay a premium for a brick and mortar institution. I'm starting to think we're not most people; in fact, the fact that the Internet lenders do everything by email and phone is probably a plus for us. Who has the time to make appointments to actually visit a bank? And these people work on weekends — Sundays even!
But we'll see. I'm waiting for a call from the Internet lender so that he can explain to me how the whole application and closing procedure will happen without a personal meeting. If that turns out to be straightforward, we may just end up going with them.