Buying a home means making a lot of decisions. Before you even look at homes, though, you have one very big decision to make. You need to find a loan officer. While they are a dime a dozen, this isn’t a one-size-fits-all approach. You’ll want to look for certain characteristics of the lender and even the person handling your loan before you jump on board.
Consider these top questions before you choose someone to handle your next mortgage.
What are my loan options?
There’s more to the lending industry than a 30-year fixed loan. You have multiple options that a qualified loan officer should inform you of before tying you into a loan. The right professional will ask you the important questions that will help him determine which loan is right for you.
For example, if you work on commission or you just got out of college and have not met your full income potential yet, you may do better with an adjustable rate mortgage. If, however, you are on a fixed budget and don’t have a lot of wiggle room with monthly bills, a fixed rate may be better.’
These are just a sampling of what you might expect. Again, with the right questions and honest answers from you, the loan officer should be able to match you with the right program.
What do you charge?
This is a loaded question. Lenders charge for many different services. Some lenders charge one fee, such as an origination fee. Others itemize their fees and some do a combination of both. So asking this question is very important as is paying close attention to the answer.
Listen for terms like origination fee, discount points, processing fee, underwriting fee, title fees, and credit report fees. This is just a sampling of the type of charges you might hear about, though. If you don’t understand what a fee is or why the lender requires it, ask. You should have a full understanding of every fee you pay before you agree to undertake the loan.
How much experience do you have in each specific loan type?
This one is very important. Let’s say you want an FHA loan because you only have 3.5% to put down on the home. The last thing you want is a loan officer that has never dealt with an FHA loan before. Even if he has only done a few of them, you still might want more experience. This goes for any government-backed loan. They have very specific requirements that if they are overlooked, you could be without a loan.
If you are not sure which type of loan you want, ask the loan officer about his general experience in each loan type. This way you will have an idea if you end up with one type of loan that he doesn’t have extensive experience in that you might want to look elsewhere.
Does your bank hold onto the loans or sell them?
This is another very important factor. If you build a relationship with Bank A, only to find out that they sell your loan to Bank B after closing, your research might have been for nothing. If you want to know about the bank that will service your loan, you have to ask. The lender has to tell you what they do with their loans.
You may find one lender that sells only certain loans, while keeping others on their own books. Some lenders sell all loans and others operate as brokers, not funding the loans themselves at all. Knowing what you are dealing with will help you determine how you should proceed based on your needs.
When can I lock the rate and what will it cost?
Your loan officer should give you an idea of when they will allow you to lock your interest rate. But, they should also tell you what it will cost to do so. Some lenders don’t charge at all, while others charge a percentage of your loan amount in order to lock in a specific rate for you.
You may also want to ask the lender about their requirements if your lock expires or about their policy if the rate drops. These are all important details you need to ensure that you get the most out of your locked rate and new loan.
What is your turnaround time?
If you are buying a house, the turnaround time could be crucial for you. Your purchase agreement will have a specific date that you must have a ‘clear to close’ from the lender. If you can’t meet that date, you put the integrity of the contract at risk.
Asking a loan officer about the turnaround time will help. You should also ask him if the underwriting is done in-house or if they outsource it. If they do outsource it, this could add to the time it takes for you to get your answer on your loan. This should play a role in whether you choose that lender or not.
How do I get you the necessary documents?
In today’s day and age, many lenders allow you to upload documents electronically. This can cut down on processing time. You don’t have to make a special appointment to see the loan officer and you don’t have to rely on someone catching your fax when you send it over.
It can take just a few minutes to get your documents over electronically, which can speed up the underwriting process. If you find a lender that only does in-person appointments or accepts only mailed documents, you may want to look elsewhere.
Asking a loan officer questions is a lot like interviewing for a job. Think about it, though, you are applying for one of the largest investments in your life. You want to make sure you know as much as possible about the person and/or company that will be handling your loan and your money. If any professional seems put off by your questions, it’s time to find one that is willing to take the time to address your needs.