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It’s Your Loan Officer, Not the Lender

Written by Posted On Thursday, 09 September 2021 00:00

When someone begins to think about financing a home, many will simply choose their own bank while others will seek out referrals from family, coworkers and friends. Maybe the last go-round didn’t go so well and a new financing source is wanted. Or, it’s a first time buyer situation who has never financed a home in the past. Whatever the scenario, going out to find a home loan needs a starting point. 

Getting a mortgage can be a confusing process, although it shouldn’t have to be. Mortgage loan officers do loans every single day whereas a homeowner can end up counting how many times they’ve needed a mortgage on one hand. When getting quotes for a mortgage, there are so many different things to consider way beyond what type of mortgage is best.

Do you want a shorter term or a longer term? A longer term will lower your monthly payments but you’ll end up paying much more in mortgage interest over the life of the loan. That’s what a shorter term addresses but in return the monthly payments are higher. And what about the interest rate? 30 year? 15? 20? Closing costs. Discount points. All of these numbers are thrown at you and it’s very easy to get a bit discouraged or even think you’re being railroaded into getting a loan you really don’t need.

Mortgage companies and banks spend a lot of money on marketing. Advertising dollars are spent online, cable tv, print media, radio and more. You hear the name of the lender, not the name of a loan officer. Such widespread advertising isn’t in the budget for an individual loan officer. Such media buys cost too much. Instead, it’s the mortgage company that seeks to make an impression. But here’s the kicker: mortgage companies and banks can spend jillions of dollars on ads but it’s the loan officer that handles the transaction. A bad loan officer can cause all those ad dollars to fly out the window. 

Or, you can apply with a major national lender and your loan application is farmed out to centralized processing center two or three times zones away. Not your best situation, in my opinion. You want a face and a name from someone you can work with. Someone with a solid track record who’s been in the lending business for a long time.

Here’s where the referral process comes into significant play. When seeking referrals, don’t ask for some lenders. Instead, ask for some loan officers. Get two or three. Ask your real estate agent for some names. Your agent will have a list of several loan officers the agent has worked with in the past. When an agent gives you a referral, it’s because that track record is there. A loan officer whose name and/or business card is handed out has earned the trust from the agent to not just give you a solid loan program but will hand-walk the loan application from start to finish. You want an advisor whose fiduciary responsibility is to you. It’s the loan officer, not the lender that matters.

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David Reed

David Reed (Austin, TX) is the author of Mortgages 101, Mortgage Confidential, Your Successful Career as a Mortgage Broker , The Real Estate Investor's Guide to Financing, Your Guide to VA Loans and Decoding the New Mortgage Market. As a Senior Loan Officer and Mortgage Executive he closed more than 2,000 mortgage loans over the course of more than 20 years in commercial and residential mortgage lending. 

He has appeared on CNN, CNBC, Fox Business, Fox and Friends and the Today In New York show. His advice has appeared in the New York Times, Parade Magazine, Washington Post and Kiplinger's as well as in newspapers and magazines throughout the country.