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. These important questions will help you ensure that you’re working with an experienced loan officer:
1. Are you registered as a mortgage originator? New laws require all mortgage loan officers to pass background checks and maintain licensing through through the National Mortgage Licensing System and Registry. 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.
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 effectively your financing options. You should revieve a Good Faith Estimate and a Truth-in-lending disclosure within 3 days of making an application.
6. How much down payment will I need? In today’s environment, there are fewer options for low-down payment loans. Many lenders now require a minimum of 20 percent down on a conventional mortgage to get the best rates.
7. What paperwork will I need to provide? A high quality loan officer will know which documents you will need throughout the process and should also supply you with a documentation checklist to help you prepare.
8. What is the estimated time-line to close my loan and what obstacles could cause delays? Loans are often closed within 20 to 45 days of application, but 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, you can be confident that you are working with a high quality lender that has your needs in mind.