10 Key Attributes of Trustworthy Loan Officers
At some point in our lives, each of us must make application for a home loan. This once cumbersome process has become further complicated by new laws that are affecting every facet of mortgage banking. With the January 2014 rollout of the Qualified Mortgage rule, some lender’s restrict their borrower’s to a maximum debt-to-income (DTI) ratio of 43%, while other lenders allow their borrowers to have a much higher capacity for debt based on characteristics of the loan file. Because of this and many other changes in the way mortgage loans are processed and approved, we can now officially say goodbye to the days where lender selection was based mostly on who had the lowest interest rate and costs. In today’s complex environment, an informed borrower will ask more detailed questions based on the lender’s particular eligibility standards and their ability to close the transaction within the time period as specified on the property sales contract.
Financial Services in a Digital World.
Your quest begins with selecting a trusted loan officer. But where are they? With more and more banking transactions taking place online, many of us have never even met our community banker. Trusting is a funny thing. The journey of trust begins by setting a tone that allows for the revealing of vulnerabilities. Sometimes, its just a glance, a nod of the head, a change in tone or the mirroring of body language that identifies a mutual understanding. You will need to speak freely about your particular situation, your issues and your concerns. It’s essential to select a loan officer with whom you’ve comfortably built rapport and chemistry.
Who are you Going to Call?
The times I’ve needed to hire a particular service provider – whether a roofer or a tax attorney, I didn’t pick up the phone book, find 3 providers and engage them for an estimate. Instead, I called to mind anyone who has mentioned they recently hired a (roofer) and I ask them how their experience went and if they would recommend the providers services. To find a trusted loan officer, start with a recommendation from your Realtor, accountant, business banker, real estate attorney, trust attorney or financial planner. Don’t have any of these people in your life? Begin the conversation with anyone you hold in high esteem and ask them if they know anyone whose had a recent experience with mortgage.
Everything Begins With a Date.
If at all possible, meet with your loan officer for a face-to-face conversation. If it’s possible, but not convenient, then at the very least schedule a 15 minute teleconference to go over your particular needs. Unless you ask your loan officer for options, you will only be given pricing on the one product you asked about (typically, the 30 year fixed rate). There are many specialty loan products available – over 10,000 at last count. If you’re a Veteran, be sure to say so during this discovery phase.
How does One Loan Officer Distinguish Themselves from Another?
Whether you’ve contacted one of the big three or the independent loan officer who runs a one-man shop in your neighborhood, it’s what he says – or doesn’t say – that ultimately leads to your decision.
- Does he speak to you in a language you understand or is he speaking Mortgage?
- Does he tell you to “trust him”, or does he lay the groundwork that develops trust?
- Does he monopolize the conversation, or does he instead direct the flow while listening to you carefully?
- Does he provide written cost estimates prior to loan application that include all known transactional fees and not just his lender’s own? Important Note…preliminary cost estimates are based on unverified credit scores, income, and assets and assumed value. Final pricing will vary.
- Is he offering simplicity? Or, is he instead addressing potential issues upfront, providing a plan to overcome the issues and furnishing a detailed documentation checklist based on your specific situation?
- If you are a non-permanent resident of the US and you earn foreign income not documented on US tax returns, is there a product that allows for the use of this foreign income?
- Does he share with you how he will be accountable to the expectations he has set? How so?
- Issues arise. Are future communications technology driven or is this loan officer making himself available for future meetings or teleconferences?
- Will this loan officer be your key contact throughout the process or will application be the last time you speak to him directly? A good expectation is to have the loan officer re-engage when credit is pulled, the appraisal is completed, the conditional loan commitment is issued, when the closing is scheduled and when the final approved closing statement is issued.
- Is he predictable? Do his actions follow his words? Predictability shows a respect for time and it naturally follows that if both of you have a respect for each others time, in all likelihood, you will get to the closing table on the date anticipated.
While even the best of loan officers can’t guarantee loan approval, you’ll know you’ve found a good one when you’ve finished your conversations with the feeling that you’ve been understood and received responses to your questions. If you’ve had a successful experience with your loan officer, be sure to share their contact information with anyone you know that is in the market for a mortgage. If you’re in the lunchroom and you overhear a co-worker talking about their search for buying a new home, interject. Don’t worry that they might think you are overreaching, at the end of the day, they will be grateful you provided some direction.