You chose your new home with care. It’s important to take the same care to find an experienced and knowledgeable loan officer. Applying for a mortgage can be complicated, and an experienced lender can help guide through the process. Our advice is to find a loan officer before you make an offer on a home. The following 8 important questions will help you ensure that you’re working with an experienced loan officer:
1. Are you registered as a mortgage originator? Mortgage loan officers must be associated with a licensed/registered company in order to make a mortgage loan. The National Mortgage Licensing System ("NMLS") is the system of record for companies and individual loan office to pass background checks and maintain licensing. If you ask for his or her registration number you can check their status and profile on http://www.nmlsconsumeraccess.org.
2. Which type of loan is the best choice for my needs? Your loan officer should ask you several questions before offering advice or suggesting a loan that’s right for you. For example, they may ask you how long you plan to live in the home, whether you are subject to job relocation or transfer, how much money you want to have left over after you close a transaction, and if you value consistent loan payments to gain insight about your comfort level with either a fixed or adjustable rate mortgage. The loan officer should explain how the payment will change, how high the payment can go, if the interest rate and payment are based on an index, what the margin is, whether the loan will be sold. If you cannot understand their explanation, consider a different type of loan or loan officer.
3. Describe your experience with my type of mortgage. New regulations and paperwork requirements can be complicated for even seasoned loan officers.
4. What kind of pre – approvals can I get to know I can eventually get a loan? Lenders provide different types of approvals prior to the final approval and closing of your loan. Lenders call these by different terms such as a pre – qualification, initial credit approval, initial credit approval in addition to pre – approval. Some lenders provide an electronic initial approval while other lenders provide a full manual review of loan applications with an underwriter to provide additional assurances on your loan application. Make sure you understand the differences between the assurances that your lender will provide to you before closing to reduce any last minute surprises.
5. What is the annual percentage rate (APR) for this mortgage? Since advertised interest rates often exclude fees, that is not the best way to compare loan officer. Instead, ask for the APR, which includes all possible fees, in order to effect your financing options. You should recieve a Lending Estimate within 3 days of making an application.
6. How much down payment will I need? There are many options for your down payment to purchase your next home. While 20 percent down has been customary to obtain the best interest rates, discuss the options that your lender may provide for lower than 20 percent and any additional costs that may be associated with such options.
7. What paperwork will I need to provide? An experienced and organized loan officer will know which documents you will need throughout the process. Make sure you find a loan officer who will educate you and explain each step and keep you in touch as your loan application proceeds toward closing.
8. What is the estimated time-line to close my loan and what obstacles could cause delays? The time to close your loan application will vary based on the type of transaction and your individual circumstances. However, missing paperwork, application mistakes, appraisal scheduling and underwriting issues can result in delays.
Finding a lender that will process your loan correctly and on-time is a vital step to completing the home buying process. By asking the right questions about a loan officer’s experience, fees and anticipated timeline, and providing the necessary documentation requested by your loan officer, you can be confident that you are working with a high quality lender that has your needs in mind.We're here to help. Contact your neighborhood loan officer to find out how we can help you meet your financial goals.