subject: Five Questions for Your Mortgage Loan Officer [print this page] Five Questions for Your Mortgage Loan Officer
Five Questions for Your Mortgage Loan Officer
Taking out a mortgage is likely one of the most important financial decisions people will make their lifetimes. Like with any major financial decision it makes sense to consult with a knowledgeable professional who has your best interests in mind. The following five questions can help you determine whether your mortgage advisor is the right fit for your next home loan.
1. What is your experience in the mortgage industry?
Make no mistake, financing property can be tricky business. Loan officers may be able to place their loans through multiple investors making choosing the right lender extremely important. Underwriting guidelines vary between products and investors and knowing where to place a loan can mean the difference between a smooth transaction and a closing table disaster. A mortgage professional with years of experience likely has learned a great deal by trial and error. With that being said, a loan officer with two years of experience who may close ten loans a month may be more up-to-date on guidelines than a ten year veteran who closes one loan a month. Be sure to delve into their past experience and their current volume of business to strike the right balance.
2. How much is your company making on this loan?
Trying to understand how much your mortgage professional is getting paid is not easy to decipher. While mortgage brokers in some states much disclose YSP (yield spread premium), lenders and banks may not have to follow the same set of rules. So, just ask. It is not uncommon for a mortgage company to make a $1,500 - $3000 on originating a loan (comprised mainly of yield spread premium and origination points). If the company is making much more than that, you may want to spend a little more time shopping around for a better deal.
3. Are you a lender, broker, or a bank?
Why does it matter? There are pros and cons to every type of institution. For example, a broker may have the greatest flexibility on where to place your loan to find the best deal. On the flip side, they likely have the lowest level of control over the process and they typically send files out-out-house for underwriting and closing which can add days to the process. Lenders may not have quite the flexibility as a broker but they have less hoops to jump through and may be able to get your loan closed faster thanks to in-house underwriters and closing departments. Much like lenders, banks may offer a very efficient process. But, they likely have a much higher overhead which may result in higher rates. Someone has to pay for the mahogany desks and marble floors. When it's all said in done, you will want to strive for a good balance of service and value.
4. Do you have any references?
Mortgage professionals may not be used to handing out references but that does not mean that you should not ask. One you get the information, call and verify that the consumer was satisfied with their service and that their loan closed on time. Also check with the Better Business Bureau and their company's licensing authority to make sure that they have a proven track record.
5. Are you affiliated with the real estate company?
Real agents refer clients to mortgage professionals who they believe will get your loan closed on time and without any hassles. Do you think most real estate agents are extremely concerned about saving borrowers the most money on their financing? While most want the best for their clients, they also want to make sure that the closing goes well and that they receive their commission (who can blame them). One way that this happens is by referring their clients to mortgage companies which have financial agreements with their real estate firms. These relationships (which are illegal in many states) should be disclosed upfront. It's easy to understand why an agent would prefer to walk down the hall to ask for a status update. You just need to be sure that you are still finding a competitive offer and not just succumbing to going the easiest route. After all, you are the one that has to make the mortgage payments for the next 15 to 30 years.
