Technology has made getting a mortgage simpler in some ways, but navigating the world of home financing is still a complicated endeavor. Obtaining a home loan may be one of the largest transactions of your life, and it’s important to have a trusted expert to educate and guide you through your options and each step of the process. That expert is a mortgage loan officer. Read on to learn what a mortgage loan officer is, what they do and why you should work with one.
What is a loan officer?
Mortgage loan officers – officially known as mortgage loan originators (MLOs) – are employees of lending institutions that assist borrowers in obtaining home financing. MLOs differ from mortgage brokers in that they work directly for the lender that provides your loan. This cuts out the “middleman” and often makes for a speedier mortgage process. It also ensures that the person you are working with is familiar with the loans and options being offered to you and the requirements and processes that go with them. In contrast to brokers, who send your mortgage application out to a separate company, your mortgage loan officer will be directly involved with your loan along each step of the process.
Mortgage brokers are often touted as offering the advantage of “shopping” your mortgage around to multiple lenders, but this doesn’t always give them an edge. At Draper and Kramer Mortgage Corp., for example, we provide mortgages through more than 50 investors and banks, so your MLO can also offer you choices from a range of sources. Some lenders don’t work with brokers at all, meaning the only way to access their products is through an MLO.
Mortgage loan officers at licensed mortgage banking companies such as ours must be licensed by their state and pass state and national standards in order to do business. The licensing process includes a criminal background check, educational courses, testing and a credit report. MLOs are required to take continuing education courses and renew their license each year. Every licensed mortgage loan officer is assigned unique state and national identifying numbers from the Nationwide Multistate Licensing System & Registry (NMLS). You can confirm an MLO’s license by looking them up at this website: http://www.nmlsconsumeraccess.org.
Preparing to get a mortgage
Your first contact with your mortgage loan officer often begins when you start to explore your options for obtaining a home loan. Your MLO will assess your credit profile and other related details to determine how much you can borrow, what loan options are available to you and what rates and costs you can expect to pay. If any detrimental factors are discovered, your MLO may be able to advise you on how to resolve them or direct you to someone who can. If you plan to shop for a home, your mortgage loan officer can get you preapproved and provide a preapproval letter to show sellers how much you’re approved to borrow. At Draper and Kramer Mortgage, our loan officers can lock in an interest rate while you look for a home to protect you from rising rates. This is a feature that few loan officers have available to them.
Deciding on a strategy
One of the most important jobs of a mortgage loan officer is offering you information to assist you in choosing a mortgage that you feel best fits your financing needs. Selecting a mortgage involves deciding among countless options that include the following:
- Conventional or government (FHA, VA, USDA) loan
- Conforming or non-conforming loan
- Fixed or adjustable rate loan
- Term (30-year, 15-year, 10/1, 5/1, etc.)
- Down payment size
- Closing cost financing
- Many more
Your loan officer will explain these and the other options available and help you decide which ones are right for you.
Factors your MLO may consider when creating a mortgage strategy for you may include:
- Your credit history, income, assets and debt
- Your financial goals (e.g. affordability, flexibility, return on investment, cash flow)
- Your current milestone in life and future plans
- Current and expected market and regulatory conditions
Obtaining the mortgage
Once you’re ready to apply for your mortgage, your mortgage loan officer will explain the process to you and guide you through each step. They will collect the necessary documents from you, help you submit your mortgage application and educate you on the dos and don’ts to ensure your financing stays on track. Your MLO will work with the loan processors, underwriters, escrow officers and others to shepherd your loan through the stages of the mortgage process. During this time, they will keep you, your real estate agent and other involved parties updated on the status of the loan and will let you know if any additional documents or actions are needed from you. If you meet all qualifications and provide all conditions, your loan will be approved.
If you are purchasing a home (rather than refinancing one), your loan officer will provide guidance for you regarding the mortgage documents that you will sign at your closing and may call in or attend. At the closing, your loan will fund, and your new home will be yours.
Post-closing and beyond
Your mortgage loan officer will often still have a role to play after your loan has closed. They will help answer any remaining questions and can provide a copy of your Closing Disclosure, which may be helpful in completing your tax return. Your MLO may also periodically check the terms of your loan against what’s available in the future and notify you if it becomes favorable to refinance your mortgage. If you have any mortgage-related questions going forward, your loan officer should be happy to answer them.
No one should have to face the stress and uncertainty of navigating a major financial decision without capable guidance. With the help of a trusted mortgage loan officer, you can make sound decisions and follow a smart strategy with your next mortgage.