Cooperation key to secure mortgage loan smoothly

by Stephanie Jensen

The new millennium has brought about many new ideas and enhanced technologies; however, one thing remains consistently true: Obtaining a mortgage loan, whether it be for the purchase or refinance of your home, requires detailed documentation and information.

Why? The mortgage loan officer is the liaison between the borrower and the secondary market investor purchasing the loan. In the process of obtaining a mortgage, information regarding assets, liabilities, financial and credit profile must be verified. This is when the process becomes very personal.

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It is important that the loan officer builds rapport and develops a trusting relationship with the borrower by demonstrating sensitivity when it comes to personal financial information. Compatibility, good communication and cooperation between both parties will ease the process.

The loan officer initially takes the loan application and begins to draw a picture, taking into consideration the borrower’s needs and the loan product best suited to meet those needs. Based on the loan officer’s experience, he/she will generally know what is required to complete the loan application for submission to the investor considering the loan request. If the credit report shows derogatory information, for example, the loan officer will request a letter of explanation.

Why do some loan officers continue to ask for additional information right up to the day before closing? Lack of foresight in many cases. The borrower will experience less of a hassle with an experienced and conscientious loan officer who will know early in the process just what is required on each specific loan request.

From the loan officer’s standpoint, the fewer times he/she has to go back to the borrower for additional information, the better the borrower will feel about the process of obtaining the loan. A good loan officer is sensitive to and aware of the frustration a borrower feels when he/she is continuously asked for more documentation. It is important, however, that the borrower understand that certain requirements must be met for the investor considering the loan request. Cooperation in providing financial information is of utmost importance.

Have you ever received a Good Faith Estimate with a quoted 8 percent interest rate, but you ended up paying a higher rate at the closing table? Keep in mind that until a rate is locked, rates are subject to market changes, and the Good Faith Estimate is just that, an estimate.

Several factors may come into play when a loan officer is quoting a rate. The investor may add to the rate for a variety of reasons, including, but not limited to, rental properties, no income verification, jumbo loans, small loan amounts, high loan-to-value and unusual properties. A knowledgeable loan officer will quote the rate with these add-ons in mind. This is why it is very important that the borrower be up front and honest as to all aspects of the loan request.

You should know that the Colorado does not require mortgage brokers to obtain licensing in order to do business. As a result, anyone with an asset base and an established relationship with lenders can be a mortgage broker.

Some brokers may be unethical by understating the rate in an effort to earn the business. This often becomes a “bait-and-switch” situation. The borrower may be lured in by the low rate but then finds that the documents reflect a higher rate when he/she gets to the closing table. At that point, the borrower will often execute the documents just to finalize the transaction, although he/she many not be fully satisfied with the outcome. This is poor business.

It is important as a borrower that you get a variety of rate quotes and recognize the potential of being misled into an unacceptable mortgage with the promise of a low interest rate. Best advice: ask friends and colleagues who they have used for their financing needs. Find a reputable mortgage-loan officer or broker that will provide a high level of experience and expertise.

With the age of new technology, many lenders have converted to automated underwriting programs. This has made the loan-approval process more efficient and effective. These underwriting programs have a set of guidelines that can recognize pertinent information and either approve or deny a borrower. Once the file is approved, an actual “hard file” is sent to the underwriter, who reviews any special conditions that must be met. Loan officers who use these automated underwriting programs are keeping up with the times and providing better service and efficiency to borrowers.

In conclusion, the process of getting a mortgage loan should be streamlined, enjoyable and rewarding. Find a loan officer who provides excellent customer service and who is dedicated to the best interests of the borrower. Ask a lot of questions and be aware of what is taking place throughout the process. Develop a strong relationship with your loan officer and the outcome will be a win-win situation. Stephanie Jensen is a mortgage loan officer with Heritage Bank Mortgage Division, 1900 Ninth St., Suite 101, in Boulder. She can be reached at (720) 890-0660.