What to expect from a loan officer during your home financing
Buying a home is complicated, and financing may be the most complex step. You’ll likely speak to multiple different financial professionals while signing numerous documents and meeting important deadlines, all to ensure your home loan will be ready by the time closing day arrives. Your mortgage loan officer is one of the most critical players in this process, and the person you’ll hear from the most–but what exactly do they do and who, exactly, do they work for? Let’s have a look.
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What does a mortgage loan officer do?
Most homebuyers will finance their purchase by taking out a mortgage. Mortgage loan officers are registered or licensed representatives of financial institutions that analyze your finances to determine what kind of loan you’re qualified for and then will help usher you through the process until that loan is underwritten.
Mortgage loan officers go through a few steps in their review process to ultimately come up with the best loan option for you. These steps usually include:
- The Loan Application Form The Uniform Residential Loan Application (URLA), or Form 1003, is the document most lenders will require when you apply for a mortgage loan
This application form includes your information, financial information including assets and liabilities, property information, declarations, demographic information, and information about any real estate you currently own, if applicable. Your lender can answer any questions and walk you through the application process.
- Collecting documents to support your application Depending on your mortgage lender, employment status, and other factors, you may have to provide recent pay stubs, your most recent W-2s, tax returns, bank or investment statements or other documentation. Your mortgage loan officer collects these documents to complete your application.
- Screening you for creditworthiness Meeting with a mortgage loan officer is essential before your chosen lender decides whether to approve or pre-approve your application. You’ll have the opportunity to explain any questionable items on your loan application or credit report.
- Guiding you in choosing the best mortgage loan for your circumstances
Many choices are available for mortgage financing, and your mortgage loan officer knows the pros and cons of these options. They’ll answer questions, explain programs, and help you decide on a loan appropriate for your situation.
- Helping to close your loan The mortgage loan closing process can be complicated. Ensuring that your rate lock doesn’t expire, for example, is a critical milestone to track and can impact your application and closing process if you’re not careful. Your mortgage loan officer keeps track of all elements of the application and closing process to ensure a smooth and timely closing for your mortgage loan.
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Mortgage officer vs. mortgage broker: what’s the difference?
Mortgage brokers work independently to help you find a mortgage or lending institution. They usually have relationships with many different lenders and can help guide you to the one you’ll have the most success or best terms with.
Mortgage brokers can also advise you on improving your approval odds before you begin the application process. Lowering your debt-to-income ratio, paying down debts, or accumulating a more extended credit history can help you get better rates. Your broker will offer counsel if you need to do anything.
You are not required to work with a broker and many buyers choose not to. Typically you will fill in an application with the broker who will then forward your application to a lender. Once the lender receives your application from the broker, you’ll begin working with a loan officer.
A loan officer can offer you mortgage loan options, but only from the lender they work for. If you want options outside of a mortgage loan officer’s employer, you’ll need to apply with another lender or work with a broker who maintains relationships with several lenders.
How do I find a good lender?
Finding a suitable lender can be a challenge, but you can do a few things to ensure you get the right fit.
- Ask your real estate agent for a referral Real estate agents cultivate relationships with mortgage loan officers who they know are reliable for their clients.
- Ask friends and family for recommendations If you have any relatives, friends, or neighbors who have bought a home or refinanced an existing mortgage, ask them who they worked with. People are usually happy to pass on a referral if they had a good experience with their loan officer–or warn away from someone they had a negative experience with.
- Ask a housing counselor The U.S. Department of Housing and Urban Development lists housing counseling services on its website that you can search based on ZIP code, language, and other variables. A housing counselor is an impartial third party who may be able to advise you best on which lenders will work best for your situation.
- Ask your bank Since most banks and credit unions employ mortgage loan officers, your bank or credit union should have one on staff who can show you the mortgage loan programs they have to offer. If you already have a relationship with the bank or credit union, you may qualify for some perks like reduced interest rates in exchange for automatic payments or other programs.
- Look online Research lenders online regardless of whether or not you received a referral. People will often post reviews, and you can check to see whether the institution has any complaints against them.
What questions should I ask my loan officer?
Asking the right questions early can be the difference between a good homebuying experience or a stressful one. Here’s what you should ask your loan officer:
- How will you communicate with us through the process? Will they be calling you on the phone or emailing you? How often can you expect updates and if you reach out with questions, how responsive should you expect them to be?
- What hours do you work? Some loan officers will only respond to your inquiries during normal business hours, while others are happy to communicate during their off hours.
- How much experience do you have? Experienced loan officers can be a tremendous asset, especially if your financial situation is complicated.
- What is your process for choosing the best loan for my situation?
- Does your institution offer first-time homebuyer programs? Many financial institutions have special programs for first-time homebuyers to incentivize buyers.
- What sets your financial institution apart from others (why should I choose you)? The mortgage loan officer’s financial institution may offer programs like down payment assistance or fast closings that others may not.
How do loan officers get paid?
The way a loan officer gets paid is based on their employer. They are usually paid a flat salary by their employer, and may receive commissions based on other factors.
When do loan officers work?
A mortgage loan officer’s schedule depends on the individual. You can expect your officer to work a minimum of Monday through Friday during business hours, but many work weekends and respond to inquiries outside of business hours. The availability of your officer depends on the individual, but keep in mind that they will likely not be able to get approvals or submit applications outside of business hours.
When should I get in touch with a lender?
Once you decide to buy a home, you should contact a lender ASAP. The financing process can take some time and include twists and turns. It’s recommended you start the process before you even begin touring homes, when you can request a pre-approval. This will give you a budget when you begin to look for homes, plus give you a better chance at winning your home bid since you will be further along the underwriting process than some other competing offers. Once you find a home and your purchase offer is accepted by the seller, your lender will need to know the final purchase price of the home before they underwrite your loan, but a pre-approval will give you a competitive advantage.
Getting a mortgage pre-approval can also save time on the back end because the lender will already have most of your financial documents on hand. And just because you’re pre-approved through one financial institution doesn’t mean you can’t shop around and switch to another lender. You can continue to apply to other lenders even if you’ve been pre-approved by one. Just be aware that each application submitted to a new lender will be a new inquiry on your credit report.