Currently I am trying Home Assistant Cloud and it seems pretty promising. However I want mobile app to connect to my local IP address once mobile is connected to LAN and home assistant updates should not go through Nabu casa server. How to do that?
App configuration / Your account (top of the page) / Internal URL.
Set that while you are connected to your local LAN.
At least that is how it is done in the iOS app. You didn’t mention if you were using Apple or Android.
Thanks Tom, I am using Android and Internal connection URl is greyed out. It is same as main url. Any idea how to chnage on Android?
Sorry no. As I said, I use iOS.
As far as I remember you need to set the home network SSIDs first before you can set the internal URL.
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Otherwise, how would the app know it is linked to the LAN 
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I set home network SSID and I was able to add internal URL. However, APP does not connect. Changing the Home Assistant URL to same as internal URL works, that means no problem with internal URL. but keeping Home Assistant URL as “Cloud URL” and internal URL as “internal IP” eg 192.168.1.44:8123 does not work. It seems bit odd. Thanks in advance for your feedback.
And the SSIDs are correct?
I have this working fine for me:
Please note I have a different port for HA due to multiple HA instances.
The above 
is basically what I have also.
Note that you do have to plug either https:// and/or http:// , depends on your setup.
in addition https over local IP leads to a non-valid cert which will not work with the app. Also in order for this setting to work the app needs location permission and location needs to be enabled on the device.
I confirm that my SSID is correct.
I am using Nabu Casa "https:// " as Home assistant URL and internal ip address without ssl (eg http://192.177.44.22). My understading is that if my home assistat is disconnected from the cloud (logged out) and mobile is connected to LAN, the APP should connect thorugh internal URL without any change in External URL. But it is not. Few other things: APP has location permission and location is enabled on device (mobile).
After reading many other similar posts, I will try internal DNS forwarding on my router.
Is the internal URL the same one you use in a browser?
Yes, it is.
You can look at the logs in settings once you reproduce the issue to what the error is. If you are using a proxy or anything try bypassing at first to see if it will connect on it’s own.