What Is the Job of a Loan Officer?

What Is the Job of a Loan Officer? 
If you have ever thought about purchasing a home, one of the main things that may go through your mind is “what is the job of a loan officer?” 


A loan officer usually works for a bank or a mortgage company that specializes in mortgage loans. 


A loan officer is a financial liaison that helps people and businesses get the funding that they need from a lender. They usually specialize in either commercial or individual mortgage loans, although they can also handle other types of credit such as personal loans. 


A loan officer will typically spend some of his day searching for potential clients to service via making cold calls. They may also use a list to work from in order to make contact with potential customers. 


Once a loan officer has secured a client, most of the time, people think of loan officers as their personal liaison between a commercial or home loan lender and the borrower. The loan officer may have a group of financial representatives or banks and lenders that they can reach out to when trying to seal the deal and secure a loan for borrowers. 


The core job of a loan officer is to help borrowers get the loan that they need, whether it is for a home or business. A loan officer may also: 

• Pre-qualify buyers for loans in certain instances 
• Help borrowers complete their applications 
• Run credit checks 
• Advise clients on how they can get the loan they need 

Qualifications of a Loan Officer
Usually you will find that a loan officer has a Bachelors degree in either business, finance or economics. Some may even have banking experience. On occasion you may even find a loan officer who has a solid background in mathematics. 


The daily duties of a loan officer vary and include: 

• Constant communication with the client and the lenders either via the telephone or over the Internet Traveling to the client or lender 
• Visiting customers 
• Drafting paperwork 
• Perform online credit checks 
• Draft correspondence 

Having a job as a loan officer will definitely require an ambitious mindset, a penchant for hard work, determination, and the ability to thrive in all environments. There will be times when the pressure is high as well as times where the work day is slow. 


As a loan officer you have to have that special something that makes people want to say yes to you. It is important to be a good salesperson, because for every 100 “nos” you will get at least one “yes.” Loan officers live by the law of averages and make every effort to get their customers the loans necessary for their needs. You will find that most loan officers are eager and determined to get their jobs done effectively.


Source:  YourDictionary

Loan Officer at Banks and Mortgage Brokers

Loan Officer at Banks and Mortgage Brokers
Loan Officers
We'll give you the average profile of a loan officer working for a mortgage broker. Knowing this may give you an insight on the guy that has your life savings in his/her hands. The average loan officer: 

• Has no college degree, may never have finished high school. 
• Makes about $1,500/month (about $500/loan) for which they typically work like dogs. Spends their day getting rejected while looking for business: visiting real estate offices, cold calling customers, going to banks looking for rejected loans, sending out mailers. 
• Gets viciously yelled at by borrowers, title companies, realtors, builders, underwriters, and his/her boss. This is part of the day, no matter how good a loan officer is. 

Loan Officers are are heavily involved in one of the biggest purchases a person makes in a lifetime, and everything about the deal looms large and frightening for the borrower. Mild mannered people turn in to screaming monsters if anything goes wrong, and there are so many things that can hold up a loan. It's not a fun business, it's stressful, hard work, and it's a good day if no one gets upset with the loan officer. Have a heart for these guys. And also realize that most of them don't respond to yelling, hysterics or threats. It's nothing new to them and will only get you an increase in loan fees as compensation for your abuse or get you terrible service. They're people, too. 


If you have less than perfect credit or a tough situation, the loan officer specializing in these non-conforming loans knows he or she will work harder for this deal and will either: 


a) hope you will be impressed enough to send many referrals in the future, or 


b) charge you more money. 


Guess which one they will usually pick? The loan officer sees an opportunity to make a little extra income. Remember the real costs involved in doing a loan. 


You should keep in mind that if you can't get an 'A' loan, the loan officer may only be able to find a loan for you which is certainly higher in interest rates, and possibly in fees, too. There are special loans for non-conforming situations. 


Especially with tough or non-conforming loans, the loan officer may charge extra points to get the loan through. How much extra is their call (and yours; you can always walk away.) However, overcharging isn't the norm: Loan officers with clients who feel they've been overcharged don't get repeat business, the real money in this industry. Unfortunately, you still need to be careful about the guy who will shaft you. Desperate people can get taken because they'll do anything to get a loan. 


If you think you're being overcharged, shop. Most brokers have access to the same products (meaning they can usually find and buy the same loans as other brokers), so call around and compare interest rates and fees, especially if you're not an 'A' loan. Don't believe the loan officer who tells you that you won't get a loan anywhere else. By shopping around, you can usually reveal who's trying to gouge you. Once you find the interest rate and fees you can live with, fill out an application at the broker's office, and lock the terms of the loan. 


A broker is your only option when: 

• you have less than perfect credit 
• are self employed (and can't prove your income) 
• just switched professions 
• or have a high debt load

Mortgage brokers can get you a loan when the banks just aren't interested in the hassle. But you will pay more in both fees and interest rates for getting your loan through. 

A bank is the best option if: 

• you have top notch credit 
• steady job/work history 
• low debt loads 
• are self-employed, but your last 2 years of income tax returns easily prove your income. 

A broker may have competitve rates/fees as compared to a bank, so don't necessarily rule out a broker even if you'd qualify for a bank loan.


Source:  CreditInfoCenter

Why do I need Title Insurance?

Why do you need title insurance?


To protect possibly the most important investment you'll ever make - the investment in 
real estate.


A lender goes to great lengths to minimize the risk of lending money for the purchase of real estate. First, credit is checked as an indication of the borrower's ability to repay the loan. 


Then, the lender seeks assurance that the quality of the title to the property to be acquired and which will be pledged as security for the loan is satisfactory. The lender does this by obtaining a loan policy of title insurance.


The loan policy does not protect the borrower.


The loan policy protects the lender against loss due to unknown title defects. It also protects the lender's interest from certain matters which may exist, but may not be known at the time of the sale. 


But, this policy only protects the lender's interest. It does not protect the borrower. That is why a real estate purchaser needs an owner's policy, which can be issued at the same time as the loan policy, usually for a nominal one-time fee. 


What is the danger of loss?


If the lender has title insurance protection and the owner does not, what possible danger of loss exists? 


As an example, assume real estate was purchased for $100,000. A down payment of $20,000 is made, and a lender holds an $80,000 mortgage lien, or beneficial interest. The lender acquires title insurance protecting the lender's interest up to $80,000. But the purchaser's down payment of $20,000 is not covered.


What if some matter arises affecting the past ownership of the property? The title insurance company would defend and protect the interest of the lender. The purchaser, however, would have to assume the financial burden of his or her own legal defense. If the defense is not successful, the result could be a total loss of title. 


The title insurance company pays the lender's loss and is entitled to take an assignment of the borrower's debt. The purchaser loses the down payment, other equity in the property that may have accumulated, and the property. And the balance on the note is still due!

How can there be title defect if the title has been searched and a loan policy issued?

Title insurance is issued after a careful examination of copies of the public records. But even the most thorough search cannot absolutely assure that no title hazards are present, despite the knowledge and experience of professional title examiners.  In addition to matters shown by public records, other title problems may exist that cannot be disclosed in a search.

What title insurance protects against?

Here are just a few of the most common hidden risks that can cause loss of title or create an encumbrance on title:

* False impersonation of the true owner of the property
* Forged deeds, releases or wills
* Undisclosed or missing heirs
* Instruments executed under invalid or expired power of attorney
* Mistakes in recording legal documents
* Misinterpretations of wills
* Deeds by persons of unsound mind
* Deeds by minors
* Deeds by persons supposedly single, but in fact married* Liens for unpaid estate, inheritance, income or gift taxes
* Fraud

What protection does title insurance provide against defects and hidden risks?
Title insurance will pay for defending against any lawsuit attacking the title as insured, and will either clear up title problems or pay the insured's losses. For a one-time premium, an owner's title insurance policy remains in effect as long as the insured, or the insured's heirs, retain an interest in the property, or have any obligations under a warranty in any conveyance of it.
Owner's title insurance, issued simultaneously with a loan policy, is the best title insurance value a property owner can get.

Refinancing... Is it a GOOD IDEA??

What is refinancing?

Refinancing replaces your current mortgage with a new loan that has a more favorable interest rate and terms that you can afford to manage. The new loan is secured on the same property as your current loan. The new loan funds are used to pay down the current mortgage while any remaining money can be used to your best advantage.

Example: Mr. & Mrs. Lee both took out a mortgage loan worth $500,000. After 4 years, both of them paid off $250,000. Mr. Lee then took out another home loan worth $250,000 in order to repay the existing loan balance.

On the other hand, Mr. Nava took out another mortgage worth $300,000 in order to repay the unpaid loan balance which is $200,000. Mr. Nava could use the remaining balance in order to fulfill other financial obligations.

The first scenario is a simple refinance while the second is that of a "cash-out refinance".

5 Reasons why you should refinance

If you're thinking of refinancing your house, check out these 6 reasons why a mortgage refinance might be right for you.

• You want to save more:
  Your monthly payments will be reduced if you get a lower interest rate or when the term of the loan is extended. However, with an extended term, you will be paying more in interest during the life of the loan.
• You want to pay down your mortgage quickly:
  You can shorten the length of your mortgage by reducing the term of the loan. Your Monthly payments will go up, but you will be able to save more in interest payments. Moreover, you'll be debt free sooner.
• You need extra cash to pay off credit cards:
  If you have enough equity in your home, you can refinance and borrow more than the current loan balance. With the extra money, you can pay off high interest debts such as credit card balances or installment loans. This refinance loan may be tax deductible under certain conditions.
• You wish to consolidate 2 loans into one:
  If there's enough equity (due to high appreciation), you can consolidate a 1st and 2nd mortgage into a single mortgage. The monthly payment on the new loan might be lower than the combined payments on the first loan and the second mortgage.
• You want to convert an Adjustable Rate Mortgage (ARM) into a Fixed Rate Mortgage (FRM):
  A FRM prevents the lender from increasing your monthly interest payments over the life of the loan, unlike with an ARM. This means your monthly payments will remain the same.

When to refinance mortgage

"Should I refinance my house now?" – This is what most people ask when they're looking to reduce their mortgage payments by taking advantage of low rates. To find the answer, check out the mortgage refinance tips below:

• Build up equity:
  You can refinance when you have built up at least 10% equity in your home (Fannie Mae owned mortgages, require 5% equity). It is possible for you to refinance if you have less than 5% equity, but you may have to pay a certain amount of money in order to make up the difference in equity.
• Check if mortgage refinance interest rates are low:
  It's better to follow the 2% Rule. The 2% Rule allows you to enjoy the benefits of home refinance if the refinance interest rate is 2% lower than your current loan's interest rate. The savings in interest will help you recoup the costs of the new loan, provided you aren't planning to move soon (the break-even period). However, there are no-cost as well as low-cost refinance loans where the costs of getting the loan are included. However, these loans have comparatively higher rates than loans that do not include the refinance costs and your options are limited when the credit market is experiencing a slump. Learn more about the when to refinance rule of thumb.  
  
  As per this rule, if your rate on the mortgage is reduced by at least 2% then only you should refinance to get a benefit.
  As always, compare mortgage refinance interest rates offered by different lenders in order to get the best interest rate. This will help you save more over the life of the loan.
• Pay off any late payments:
  There is no such limit on the number of times you can go for home refinance loans. Most lenders prefer that you have no late payments in the last 12 months before you refinance.
• Remove negatives and improve your credit score:
  Get your credit report from the bureaus and review it for any negative items (late payments, collections, etc) and inaccurate items. Dispute any inaccurate items and remove them from the report. Pay off as much of your debt as you can. Otherwise, you won't get a low interest rate and may not even qualify for a refinance loan. Of course, there are lenders in the subprime lending market who may offer you a mortgage refinance loan, but it's better to avoid them as they'll charge higher interest rates and fees and could be fraudulent.

When NOT to refinance

Refinancing is not a good idea if:

• Your property value has gone down:
  If your property value goes down and you refinance up to 80% of the appraised value, your original mortgage amount may be higher than the amount you borrow. Therefore, the new loan will not be enough to pay down the existing one.
• You have been paying off the first loan for a long time:
  If you are almost finished paying off a 30 year fixed mortgage, then refinancing is not a good idea. You will lose equity in proportion to the amount you borrow over and above the remaining loan amount.
• You have used up enough equity:
  Refinancing is not a good idea if you have already reduced the amount of your equity by taking out a 2nd mortgage or a home equity loan. Refinance loans for 100% of the loan are rare, and with the mortgage market currently in a crisis, are hard to find.
• You have a few years left on the current loan:
  If there are only a few years left on your current loan, then refinancing is not a good idea. Taking out a new loan will only put you deeper into debt just when you were about to become debt free.

Refinancing makes sense for the right reasons and at the right time. You need to decide whether to opt for a simple interest rate adjustment refinance or a refinance that will provide you with extra money. If you'd like to check out what mortgage refinance rates and terms are currently available, request a no-obligation free mortgage refinance quotes from our community lenders and brokers.

Mistakes to avoid when you are shopping for a Mortgage

Whether you are looking for a Mortgage for your First Home or refinancing your current loan, it is important to know the most important mistakes people make when they looking to get the best deal.

• Choose the loan provider that offers the best price and rate over the telephone, TV advertising or newspaper:  If you look at all of them, you will find a lot of lenders that will beat each other at several different prices, but not one of them have the capacity nor the intention to deliver those offers.  Their intention is to get you interested, move along with the process until it is too late for you to back out.  By then, they will raise the price using a lot of tricks available.  You want to make sure you are talking to a reputable lender and one that will deliver what they are promising.  In order to determine this, they will offer you either a Fee sheet or a Good Faith Estimate.  Now a days, lenders will not issue a Good Faith Estimate unless you have decided you are going to do the loan with them.  They are bound to the fees they quote in the Good Faith and if you are not serious about using them, or you do not have a property or do not know what loan program you are going to be using, it is hard to determine what the real fees will be as they depend on third party providers also, and different loans have different fees. Still before you sign a loan commitment or give them any application fees, you want to make sure you are talking to somebody that will deliver.  Usually application fees are non-refundable.

• Request quotes for rates without giving the lender all the information about your situation:  This might affect the price, the fees and the lender will not be able to give you an accurate quote.  You have to make sure you let them know what you are planning to purchase, type of home, occupancy type, down payment, loan size, equity in the property if you are refinancing, your ability to document your income and assets, etc.  Unless they are not given all the information, they will give you a quote assuming the standard specifications and will give you a low price, this might not be realistic for your situation.
•  Shop for your mortgage on different days:  Because of the market volatility this is a huge NO NO!!  This will not be comparable...Unless you are shopping all of them on the same day, this really is useless and you are wasting your time and energy.  Shop all of them on the same day.
• Confuse a No-Cost Mortgage with as a No-Cash Mortgage:  This is one of the worst mistakes a borrower can make. "No-cash" means the borrower does not have to pay the settlement costs at closing, but the lender doesn’t pay them either. The costs are added to the loan balance, so the borrower pays them over time, with interest.  Buyer usually pays a higher interest rate on a No-Cost mortgage as the costs are calculated and are put into the loan in the interest rate.  Depending on the closing costs, if the lender needs for example $3,000 for closing costs they will charge the borrower the rate that will give them $3,000 in rebate to cover those costs.  Really they is no such thing as free in the mortgage business... you will get charged somehow.

• Select a Lender without knowing any of the other charges except points, then try to negociate them afterwards:  Before you make a decision on whom you are going to use, find out all of their fees, I will write a post in regards to this but please, do make sure you know what you are getting yourself into.  Everything costs money, Title Insurance, Escrow, Credit Reports, Appraisals, Inspections, Flood Certifications, Recording Fees... just to name a few, so make sure you do know about these fees before signing any initial documentation.

Getting to know what you can afford

The rule is that you usually can buy three times as much as you make.  So if you make $50,000.00 per year, you can buy up to $150,000.00.


This will be in the perfect world of course and if you have absolutely no other debt, no car payment, no student loans, no liens, no credit card payments, etc.  The whole thing is based on something called a Debt-to-income Ratio.


What is the Debt to Income Ratio?


A debt-to-income ratio (often abbreviated DTI) is the percentage of a consumer's monthly gross income that goes toward paying debts. (Speaking precisely, DTIs often cover more than just debts; they can include certain taxes, fees, and insurance premiums as well. )


There are two main kinds of DTI, as discussed below.  The two main kinds of DTI are:

1. The first DTI, known as the front-end ratio, indicates the percentage of income that goes toward housing costs, which for renters is the rent amount and for homeowners is PITI (Mortgage principal and interest, mortgage insurance premium [when required], hazard insurance premium, property taxes and homeowner's association dues [when applicable]).
2. The second DTI, known as the back-end ratio, indicates the percentage of income that goes toward paying all recurring debt payments, including those covered by the first DTI, and other debts such as credit card payments, car loan payments, student loan payments, child support payments, alimony payments, and legal judgments.

Example:

In order to qualify for a mortgage for which the lender requires a debt-to-income ratio of 28/36:

• Yearly Gross Income = $45,000 / Divided by 12 = $3,750 per month income.
  • $3,750 Monthly Income x .28 = $1,050 allowed for housing expense.
  • $3,750 Monthly Income x .36 = $1,350 allowed for housing expense plus recurring debt.

In order for your lender to get you pre-qualified for a mortgage and find out what you can afford, they have to review the following:

• Last Full Month Pay stubs
• Last 2 years W2's (or 2 years tax returns if you are self employed)
• Last 2 months Bank Statements
• Any Other Income you might receive (Proof for the last 3 months if it's Social Security or Disability, Pension, Alimony, Child Support. - This has to continue for the next 3 years in order to be considered usually)
• If you pay child support or alimony, you need to provide with divorce decree and child support court order or alimony order.
• Any Assets you may have (401K, Investments, IRA, Life Insurance, etc.)
• Review Full Tri-Merge Credit Report

Be honest with your lender, things do come up, if you fail to mention a lien or something that is bothering you but you are thinking about hiding, better not, talk to your lender about it, it's better to be honest up front so things do not come up later on and, believe me those surprises are not usually good.  They can delay closing or even cause the loan to be denied.

The lender will then review your paperwork and do a pre-qualification for you, with your income and your credit and by taking a loan application.

It is true that the better your credit score you are better off getting the best rate and a very good loan, but that doesn't help you necessarily to afford more for a house.  That is all up to your debt to Income Ratio.

Different Types of Loans will determine what DTI is acceptable.

Some of the best loans to get as per my experience are the following:

• Conventional 30, 20, 15 or 10 Year Mortgage  DTI    28/36
• FHA 30, 25, 15 years Mortgage  DTI    31/43
• USDA 30 years Mortgage  DTI   29/41
• VA 30 or 15 years Mortgage  DTI 41

It is really your lender's job to know which program is the best for your situation, if it is a good lender they will make the right choice for you.

I want to buy a Home... What do I do now?

Here are some of the first steps on what to do when you are ready to purchase your First Home... I will go into detail in a different post.

The first thing you want to do is find out how much you'll be able to afford so you can have a price range in mind.  You need to talk to a Mortgage Lender first, the most common mistake people make is they think, well, I want to buy a house, I'll call a Realtor... Well, that is not the best first step.  If you have a good realtor, most likely he or she will send you to get pre-qualified or pre-approved for a mortgage.  Really, nobody wants to be wasting time.  You don't want to go see a home that you might not be able to afford or he doesn't want to be showing you houses, taking you around town when you are really not sure if you are going to buy anything soon.

Choosing your Mortgage Lender; You want to look at your local bank first, people are afraid to go their own bank sometimes because they think the process is too long or they simply don't know that they do offer mortgages.  Ask, most Banks and Credit Unions now offer Mortgage loans.  Some banks offer no fees, (not all of them, and you have to keep in mind that there is no such thing as free lunch either, they will charge you somehow, either in the interest rate or application fee).  Other banks offer concessions, maybe if you have a checking and savings account they do offer you a discount.  If you have direct withdrawal you might also get a discount.  It will all depend on the institution.  It does not hurt to ask.  Keep in mind not all institutions offer these benefits.   You can also ask friends and family and see where they have gotten their mortgage loan from, they are your best chance if you are unsure on where to get a mortgage loan from.  Talk to the loan officer, if she or he was able to explain the types of loans, downpayment, loan fees, the process, time frames, you have to go to a meeting with lots of questions.  Loan Officers like that,  you need to ask, so don't be afraid to bring a notebook with questions if you need to.  Ask about rates, monthly payment... how much will you be qualified for?  Now, don't make the mistake a lot of people do.  Don't get into too much.  Nobody else than you knows how much you really can afford.  If you know you can only do $1000.00 a month, and your loan officer tells you, you qualify for a payment for up to $1500.00 don't go for it... you have to consider that your mortgage payment is only one of the many new payments you will have, specially if you are not used to paying utilities, maintenance and such.  So be honest with yourself and be wise.  Don't over do it.  That's the main reason why there are so many foreclosures in the United States at the moment.

Now, you are ready to go house shopping.. This will be a very fun time but could be really stressful and at the same time discouraging.  Specially if you are looking at houses weeks after weeks and you can't find anything you like!  Yes! Hire an agent... he or she will be your best friend for the next few weeks or months...  It will have to be somebody you will be comfortable with so choose wisely, again, ask advise from your friends, relatives or co-workers.  If all fails look in the real estate book and call an agent.  This agent can usually show you any house that is available for sale through a Real Estate Agency.  Depending on the State you live, You do not have to pay your agent unless you are selling a home or they tell you they charge for their services, they usually get paid once they sell the home and they do get a percentage from the sale.  Tell them how much money you are pre-approved for and whom you are working with as a lending institution.  It is your choice on how much you want them involved in the loan process, basically both the Lender and the Real Estate Agent work for you, they are both working to get you in your house as fast and easy as possible.  The agent will be the contact in between you and the selling agent.  It is best if you don't have the same agent working for both buyer and seller, it is kind of a conflict of interest and really as much as you can you want to try to avoid that.

Once you have found a house go back to your lender and give them or have your realtor send them the purchase and sale agreement.  This will get started with the loan process.  This process depending on the institution will take between 30 - 60 days.  Don't fret, this is just normal for these times.  Be prepared to be asked for a LOT of paperwork.  You will wonder, why do they need that?  Well, you have to remember, in times like this, Banks have gotten really tight and have more and more guidelines and things change basically daily, so don't be surprised if they ask you:  Where did that $25.00 deposit come from?  Really, it has happened.  True Story in times like these.  Try to give your lender all the information they request in a very timely manner and if you have questions ask them, but usually there is a big reason for them to ask for a certain document.  Will explain the Loan process in a different Post.

When the loan is approved, and closing documents are sent to Escrow.  You will go sign your final loan documents.  These will be:  the lender disclosures, the Note and Deed of Trust and some closing and state disclosures.  You will most likely not get your keys that day.  Again, depending on the State you are in.  Usually you will get keys to the house the day that your money is wired to Escrow and Loan is Funded and Deed of Trust Recorded.