Buying a house and taking out a mortgage in 2016 can be tricky and filled with lots hidden obstacles. Just like shopping for any other product or service, the final price, your interest rate and closing costs, are important ingredients for success. The good news is that interest rates are still at or near historic lows, and recent industry changes have made it even easier to compare loan programs from one company to the next. Being connected with the right professional loan officer can make all the difference when it comes to figuring out exactly which loan option is right for you and ensuring that you are as happy as possible when moving into your new home.
Here are the most important questions you should be asking your loan officer:
- Do you work for a lender or a broker?
The very first question you should ask your loan officer is related to who they are licensed through. In the last decade, the pendulum has continued to swing away from the broker making the preferred method for accessing your financing coming directly from a lender. Brokers are by definition middle-men which can add time, increase costs, add delays and result in unnecessary underwriting conditions when taking out a loan. The value of working with the right team and having direct access to the actual underwriter are critical and usually results in a more efficient process and more enjoyable experience for the client.
- Do I understand what my loan officer is saying?
There is an age-old saying – you can’t explain something simply until you have true understanding. One of your loan officer’s key qualities is their ability to communicate. Not just being friendly, a professional loan officer should be able to explain concepts simply and easily. He or she should be able to communicate why something is a challenge or would require additional documentation in a way that makes sense, not just because the underwriter is asking for it.
We always know when we are connected to a professional and someone who dedicates themselves to their craft. Put your faith in someone who earns the right to do business with you based on the way they communicate. And if you don’t understand what they are saying, don’t be afraid to ask questions – your loan officer is here to help you.
- Do your guidelines require overlays?
Think of your mortgage like a winning Powerball ticket. You wouldn’t take the money over time…you would collect the proceeds today. The lending business is similar, as mortgage lenders sell each mortgage they underwrite to investors who collect that interest income over time while mortgage banks receive proceeds today. This makes a bank’s ability to sell your mortgage on the secondary market an important factor in determining their ability to approve your loan. Some smaller lenders are really nothing more than big brokers which means they don’t have many outlets to sell their loans. The result is more conservative underwriting guidelines or additional unnecessary requirements to fund your loan. Find a bank that doesn’t add layers to your approval and can fund your loan as Fannie Mae, Freddie Mac and FHA intended.
- Am I being treated as a customer or client?
The vast majority of loan officers see the buyer or applicant simply as a customer. Someone who is purchasing their service and they see the experience as a way to generate business. Since buying a home is one of the biggest financial investments most of us will make, shouldn’t we expect more? Aren’t we more than just temporarily important, or a simple commission?
The best service-oriented partners in the mortgage business treat everyone they talk to as a valued client. The client is someone who is important and your results and experience should matter to your loan officer. It’s important to remember that you have many choices when it comes to getting financing. See yourself as a client. Require that you are seen and treated as a client. If you don’t feel connected to your loan officer and don’t feel that your loan officer is genuinely invested in your best interests, find someone else who will be.
- What other services do you offer?
If you had a problem with your foot, you wouldn’t go to your family doctor. You would seek out a specialist and find the right podiatrist for your needs. The mortgage lending space is filled with general practitioners who offer a multitude of products from checking and savings accounts, CD’s, auto loans, personal loans and lines of credits. Those companies are a great choice when the needs for those products and services arise but when it comes to getting your mortgage financed, your best choice will typically be from a mortgage lender who specializes in all things mortgages.
It’s recommended to partner with someone who is singularly focused on knowing the detailed and ever changing landscape required to approve and issue mortgages today.
- Am I pre-qualified or pre-approved?
There tends to be a lot of confusion with these two terms. Simply put a pre-approval can only be issued when the loan has literally been reviewed and approved by an actual underwriter. This makes all other ‘approvals’ in reality pre-qualifications and the strength of that review is only as good as the loan officer who issued it.
Your confidence should be based in the experience, dedication and knowledge of your loan officer partner. Make sure they ask you detailed questions about your life, such as your residence and job history. Asking things like “how is your compensation broken out?” can help your loan officer better understand you and your financial situation. In many cases, several more questions should be asked and verifications performed prior to issuing the pre-qualification letter. The premium is on the accuracy of the application – this is the most vital thing that will ensure your loan will be approved by underwriting. This process should be efficient, not easy. It should be simple, not fast.
Whether you are pre-qualified or pre-approved, you should spend time analyzing the process of your loan officer so you are confident in your qualifications and their ability to pre-qualify you.
In the last decade, the mortgage business has been commoditized putting an emphasis on service, communication and execution. It’s these skills that your loan officer needs, and that you need to look for in order to make the right choice. The Kelly Mortgage Team, licensed by Envoy Mortgage, is committed to helping you find the best mortgage possible and working carefully with you to ensure that we deliver. We understand that our ability to communicate with our clients to ensure they are 100% satisfied with their total mortgage experience is what matters most.
Contact one of our loan officers today at 610-355-1801 and we can get started.