Bank loan officers versus brokers - When choosing a mortgage professional to work with, you need to decide if you are going to work with a loan officer from a bank or a broker. There are some major differences between the two. Here is some of what sets them apart.Banks use retail rates, while brokers have access to whole sale rates. Brokers are also working with multiple lenders so they have several whole sale rates to choose from. This means they can find the lowest rate for your situation.
Bank loan officers typically offer programs for "A Credit" borrowers or those with the best credit. Mortgage Brokers have access to hundreds of different programs to fit every credit need.
Local retail banks sell only their own loan products. If a bank does not offer a loan program suitable for a borrower in a particular situation, rather than going outside of the bank to find the perfect product, a bank loan officer would try to sell to the client the next best thing. A mortgage broker has much more loan programs to offer. In the same situation, a broker can usually go to other banks and structure a home financing plan short of tailored made for the borrower.
Loan officers who work for brokers are often paid as 'independent contractors'. As such, they usually are only paid commission and have the freedom to operate how they want (within reason). One advantage of this is that they may be willing to work in the evenings and on weekends if that is the only time that you are available to meet with them. Sometimes they are even willing to drive to your home to save you time and make the process that much easier for you. This isn't always the case, however, so don't expect it.
When you work with a broker, you will find out how much the loan officer is being paid in Yield Spread Premium (YSP). This is something that the lender pays the broker, and the amount that is paid is dependent on your interest rate. A loan officer can raise your interest rate in order to be paid more in YSP from the lender. This allows them to charge you less in fees on the Good Faith Estimate (GFE), and in many cases can save you money.
Bank loan officers are also paid Yield Spread Premium, but they are not required to disclose how much they are making.
Loan Officer - A loan officer is a mortgage professional who assists with originating a mortgage loan for a borrower. A loan officer will help a borrower to identify their needs, select a loan program, complete the application process, offer advice and answer any questions a borrower may have.
Loan officers may work for either a bank or a broker. Both have similar jobs, but their products are very different. Loan officers who work for banks only have access to the loan programs that the bank offers, while loan officers who work for brokers have access to all of the loan programs from many different lenders. In fact, many brokers work with hundreds of lenders nationwide.
Many loan officers specialize in specific types of transactions. Make sure you either select a loan officer who specializes in helping clients with transactions such as yours; or a loan officer who at least does not specialize in transaction types not related to your loan type.
A loan officer works with borrowers to help them choose the right loan program. The loan officer then helps the buyer complete loan application and required disclosures to apply for their particular loan program. The loan officer also acts as the liason for the lender and buyer during the process to help get the loan closed in a timely manner.
A good loan officer not only is knowledgeable, but is professional. They return phone calls promptly, and do the research necessary to ensure the borrower gets all their questions answered correctly. An un-researched answer could cause serious delays later on, or worse cause the loan application to be denied altogether. A good loan officer knows how to preempt future problems and prepare for it.
When looking for a loan officer to handle your mortgage transaction you should look for a loan officer that is someone you feel comfortable with and can trust, is professional, is knowledgable, and is reliable. A mortgage is one of the biggest investments in most people's lives and you should feel comfortable and secure with the person you decide to work with.
When interviewing a loan officer who will assist you in a major financial transaction choose one who is knowledgeable, professional, organized, efficient and who gives you a sense of trust and comfort.
One thing that the Loan Officer does not do is decide what documentation that you will need or what conditions your loan approval are based upon. On rare occasions, the Loan Officer may negotiate with the underwriter if there are conditions that seem unfair or you are unable to meet. Generally speaking though, the underwriter will decide what conditions apply and the Loan Officer and you as the borrower must comply in order to complete the loan process.
A mortgage broker has many more programs than loan officer at a bank. Brokers are able to offer more products that will help you get the loan you want to achieve your financial goals. Brokers are especially good when it comes to buying investment properties because of they offer more programs that can help the property cash flow.
With the recent advance technology development in the mortgage industry, loan officers can now get a loan approval from banks in a matter of minutes, making the role loan officers play ever more important to homebuyers. A knowledgeable loan officer is the first person in the loan process who can tell whether a loan application is likely to be approved or declined, even before the application is submitted to a bank underwriter. The loan officer can then advise on how to improve the likelihood of getting the application approved, before it is declined by lenders.
A loan officer normally works directly for a broker, whom is licensed. In some States the LO is also required to be licensed. You should check with your LO to ensure he is licensed if required.
Loan Officers are a valuable resource, and have your best interests in mind.
