A Loan Officer is Licensed by the National Mortgage Licensing System (NMLS). This holds true across our great nation. A Loan Officer can do multiple things but our discussion today will be for first-time home buyers and move-up buyers looking for their primary residence to live in. This type of home loan is called a Qualified Mortgage and certain rules have to be followed by your loan officer to stay in compliance with the law. If you are looking for an investment property you are not a qualified mortgage home buyer as under the law and you are not protected under the same rules as a primary home buyer. When finding a Loan Officer you should know these basic facts of the law so it can benefit you. If your Loan Officer doesn’t even understand these basic rules of the industry then you might need to find one that does. Of course, there are many factors that we will be covering to pick the right Loan Officer for you.
So how do you know what Loan Officer or Company to pick when shopping for a new Mortgage? The first thing everyone should know is you have to feel comfortable with the loan officer. You have that little voice in the back of your head and if it is screaming at you to not trust the person on the other end of the phone that is your first sign. A little knowledge of what a Loan Officer actually does goes a long way. Trust your intuition with the person on the other end of the phone as we are in a mortgage market right now where every deal is important to have as it is so slow and interest rates are on the rise. Loan Officers are having to compete like no other time in the industry so some of the things that they will say are misleading or bait and switch.
I know this as I have clients telling me daily that they have been quoted interest rates far below where the actual market is. For example, you are shopping for interest rates for a home you will be living in, or as we stated above a Qualified Mortgage. You are getting quoted consistently in the low to mid 7’s for interest rates based on your credit qualifications. When you call and talk to a Loan Officer that tells you that the interest rates are in the mid to high 6s anybody’s first reaction would be to think they have found the perfect deal. The trap here is that you have been fooled but you don’t know it yet. So you gather all your documents, complete the loan application and deliver it to the loan officer you talked with earlier. Then you wait for all the inspections to be done on the house you are in contract on to see what might be wrong with the house and you become distracted with the house and not the financing. A loan officer understands how this process works so about this time when the inspections start to come in, the Loan Officer sends out the disclosures, required by law, and you realize that the terms are not what you were told on the phone. So you call the Loan Officer and he or she tells you that things have changed and that this is your interest rate which happens to be in the low to mid 7’s. So you think “Oh well I don’t want to have to go through delivering all that paperwork to another lender so I will just stay here.”
If this happens to you, you should run as fast as you can to one of the Loan Officers you talked to that you felt comfortable with as if they lied to you in the beginning to get your business what will stop them from lying more and possibly getting your loan declined because they were untruthful to the processor and the underwriter. Because the actual people who are working on your loan may not trust that loan officer because they know they are not a truthful person. This kind of deception is called the Bait-and-Switch sales technique which is highly unethical, but people will do it to get the business in the door.
When shopping for a Mortgage you should always go with the Loan Officer who you are comfortable with and although they can’t match that low rate that was told to you by the untruthful Loan Officer, you can trust that they will get the job done for you with an interest rate that is real. This brings me to the fact that if you are a home buyer, with good credit and you are looking for a home to live in you are not only protected by the law but you now know that all Lenders and Mortgage Brokers have to get the interest rates from all the same sources like the Federal National Mortgage Association (FNMA or Fannie Mae) or the Federal Home Loan Mortgage Corporation, FHLMC, or Freddie Mac. So if you are being told something different be very suspect as all Lenders that are dealing with FNMA and FHLMC will be in the same basic interest rate range. Some lenders or Mortgage Brokers can be slightly better in interest rates only because they may have less overhead but there should only be at the most a .5% difference in interest rates between all lenders and Brokers on any given day and that may be high.
The moral of the story here is that if it is too good to be true it usually is. Your Loan Officer should be your advocate through the process. Your Loan Officer will be integral in helping your loan get through the process as fast and efficiently as possible. You will be in contact with your loan officer once you have found a house almost every day so you should have a good working relationship with them. I also would be looking for energy in my Loan Officer as it takes a lot of energy to get your file through the system fast and efficiently. Your Loan officer should have a working knowledge of how your Realtor does his or her job, in fact, if your Loan Officer also holds a Real Estate License you will know that he or she has an advanced knowledge of how the Real Estate Process works. At MAE Capital Real Estate and Loan, all of our Loan Officers will have both a Real Estate License and an NMLS license. Be careful of Credit Unions and Banks as they are not under the same rules that we are so they generally have slower turn times and Loan Officers that do not hold Real Estate Licenses and in some cases, you may be talking with someone at a bank or credit union that doesn’t hold any license. We are here to help and we will not mislead you in the process of buying a home in fact we don’t even get paid until we close your transaction so it is in all our best interests to get your transaction closed as quickly and efficiently as possible.
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Debt Management Tips for First-Time Home Buyers
Are you planning on buying a home within the next year? Now is the time to start managing any existing debt so you can improve your debt-to-income ratio and boost your credit score. While you don’t have to pay off all of your debt before buying a home, do what you can to get your financial house in order before taking on more debt. The last thing you want is to become house poor! Here are some debt-management tips to help you prepare for a home purchase in the next 6-12 months.
Home Buying Steps for Business Owners
If you own your own business, you may have to take some extra steps as you prepare to buy a home. For example, consider forming an LLC to protect your personal assets from business-related debts or lawsuits. This will keep your new home safe from creditors! LLCs also enjoy tax advantages and management flexibility that can make it easier to grow your company. Plus, when you file an LLC, your business will seem more credible to mortgage lenders when it comes time to buy your new home. Check specific state regulations around forming an LLC so you know what to expect.
Cut Your Spending
If you want to pay off a lot of debt quickly, one of the first things you should do is reduce your spending. MoneyUnder30 recommends against creating a strict household budget and tracking every dollar you spend. Instead, set up a system that tracks all of your spending automatically, like using a single debit or credit card for everything.
Consider allocating yourself some money to spend on personal expenses, like a dinner out or a new clothing item. For example, you could set aside just $100 a month to spend on treats for yourself. Rewarding yourself for your spending cuts is a great way to maintain your motivation.
Make a Debt Reduction Plan
People use all kinds of different methods to pay off debt. Look into your options and choose a debt repayment method that will work best for you. For example, you could start by paying off either your smallest loan amount or your debt with the highest interest rate. These methods are known as the debt snowball and debt avalanche, respectively. Both of these methods can boost your confidence and increase your sense of control over your debt, encouraging you to continue down the same path.
Transfer Your Debt
If you’re paying a lot of interest on your debt, consider transferring your remaining balance to a line of credit with a lower interest rate. This will make it easier to pay down your debt. For example, you’ll typically pay a much lower interest rate for a line of credit than for a credit card or personal loan. A line of credit can also be useful for consolidating several loans into one. Just use the money from your line of credit to pay off all of your other debts, then you only have to focus on making one loan payment each month.
Land a Side Gig
Bringing in some extra income will help you pay off debt more quickly. Consider picking up a side gig for a little while until you’re happier with your debt situation. Look for a part-time job in town, drive for ride-sharing companies in your free time, or offer professional services remotely on a freelance basis. There are countless ways to make money on the side of your full-time job!
If you’re planning to buy a home within the next year, start preparing your finances now. Don’t let your existing debt get in the way of your homeownership goals! Make a plan to start paying down your debt now so you can feel confident in your decision to become a homeowner in the near future.
Are you looking for your dream home? MAE Capital Real Estate and Loan can help you find an affordable mortgage! Call today so we can discuss you
Article was written by: Suzie Wilson