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.

Explain To Me!

Hello and welcome to my first attempt at a blog. You as consumers deserve more control in your mortgage process. This is my attempt to give you that control in the form of information and knowledge.

I have been involved in mortgage financing for 5 years with 3 years specifically as a Mortgage Loan Officer. I've taken plenty of applications and have spoken to just as many people. I plan to share with you the patterns I've seen emerge and ways to improve your standing in the mortgage process and to improve your credit. I'd like to give you a leg-up on anyone else applying for a loan because you will know what's really going on.

Let me also tell you what I am not. I am not a writer. I cannot apologize for this shortcoming since my goal is not to impress you with prose. I want to tell it how it is. I'd like you to be exposed to the brain of a loan officer and I'd like to open the door to show you what goes on inside the bank during the decision process of your loan.

I don't pretend to be the best and most knowledgable loan officer out there. I'm sure there are plenty that make more money than me. The difference is that they make money based on what you don't know. I sleep better making sure everyone I talk to is completely educated about the mortgage process even if that does affect my earnings.

I'm not selling anything to you. Let me repeat: I'm not selling anything to you. Yes I'm a commisioned loan officer but I only work with clients I can meet face to face. The only way I'll work with someone directly is if you happen to be buying property in Pennsylvania. I know plenty of mortgage brokers that make money by helping people buy homes all across the country. They thrive by keeping their customer in the dark. Most of their customers don't realize that there is someone just down the street that can do the same thing as this person across the globe.

There are distinct benefits to staying local when choosing a mortgage broker. It saves time when you know you can drop off necessary documents at the office. Your loan officer can copy them and hand them right to you. Not so with a national broker. You also have the best advantage in the world when you can shake your loan officer's hand and smile. It is in those first 30 seconds of meeting a person that you can make the best decision whether you truly trust that person or not.

I know I didn't spill much information on my first blog here but this could perhaps be the most important point. Only work with people you can trust. The second your subconscious says that you can't trust this person you should cut and run. Speaking of... never ever ever do an application with a mortgage broker if they ask for any fee. You should not have to pay $1 out of your pocket to your loan officer until at least after you've found a house, signed a sales agreement and are having your future home appriased. Many lenders will even pay for that and charge you back in the closing costs. You should always be free to walk away from your mortgage broker. He should accept this because if you did walk, it was something he did or didn't do that made you leave.

In the same token, don't expect to come to the closing table with no money at all. It is VERY rare that this happens. You will need to make at least a small investment in this huge home purchase, usually a couple thousand dollars to secure your new home. It is unrealistic to think otherwise. There are ways to reduce the amount you would need to bring but we'll get into that a little later.

Since this is my intro to blogging, I'd appreciate any helpful advice or constructive criticism regarding future topics or just on improving the web page here.