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.