The Cast of Characters - Part I
There are many people involved in the mortgage loan process. Some you will meet or speak to, some you will never know existed but each has a very important role in the processing of your loan. If you know the people, you can better understand the process. I'll start at the start.
The Mortgage Loan Officer
The term "originator" is also often used and its more relevant to his role. This is the person that seeked you out and created the loan application. He may have found you through a referral, he might have found you on the internet, or he may just know you. One way or another he got your attention and sold you on the fact that you would be best off if he helped you get a loan. This person will earn a commision upon the loan closing and is in charge of the overall process of your loan. You should meet this person face-to-face since they have the most control over your application.
After he has originated the loan by seeking you out his next step is to "place" the loan. A mortgage broker works with 5-50 different lenders at any given time. They all try to get his loans by offering special incentives and promising great service and a quick closing. First the Loan Officer will determine which lenders will accept this particular loan. He'll then pick 2-3 lenders he feels comfortable with and sends them an overview of your file. The lender will normally fax him the interest rate and terms they can get based on the summary he showed them within 24 hours. He then picks the best lender to use. The "best" lender sometimes has less to do with rate than: the loan officer's comfort level with that lender and the people that work there, the incentives (in the form of monetary rebates at closing or rate cuts) that the loan officer receives for doing business with them, and the reputation of that lender's underwriting department.
He will then quote the rate with the lender he chose to you and let you know what your monthly payments will be. If you're local, the next step would be to set up an appointment where the two of you can sit and go over the details of your loan. He'll go over your payments, costs, and your credit report. He'll ask you to bring documentation to support your application. At this point you will be asked to sign your application and disclosures. We will get into the application and required documentation in a later post.
If your loan is a refinance, the loan process begins immediately. If you're buying a home he will issue you a PreQualification Letter. This is a letter of good faith to show the seller or their Realtor that you do have the ability to secure a mortgage. Often, this letter is required to view a property or start working with a Realtor. Having one gives you a distinct advantage in that the seller knows that once you sign a Sales Agreement your loan process begins immediately.
After you've signed the Sales Agreement (or right away if you are refinancing) the Loan Officer will order an appraisal and title search. He will also send your signed application and supporting documentation to the lender's underwriting office for review. This process usually takes 24-48 hours. It is then his job to collect all the information and documents that the underwriter requires before the loan can be "Clear to Close". After all is collected, the loan is "Clear" and the closing is scheduled. If you've chosen a local Loan Officer, he will be by your side as you sign your closing documents at the attorney's office.
We'll describe some other characters and their roles in the next post. The Loan Officer is the one person that's in it from start to finish so I needed to devote a whole page to him.