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Make sure you are working with an experienced, professional loan officer. The largest financial transaction of your life is far too important to place into the hands of someone who just quotes rates, but is not capable of advising you properly and troubleshooting the issues that may arise along the way. But how can you tell?
80% of Loan Officers are NOT Licensed
CHECK YOUR LOAN OFFICER OUT on the Nationwide Mortgage Licensing System and Registry
Bank Loan Officers
versus SAFE ACT (Licensed) Loan Officers?
There is a BIG difference YOU need to understand
Recent changes to the lending industry requires all
loan officers to have a tracking number, known as an NMLS number (Nationwide
Mortgage Licensing System and Registry). It should be displayed on their
business cards, E-Mail, web sites, all correspondence, and most loan documents.
The display of the NMLS number may make many believe the Loan Officer is licensed. Sadly, this isn't true, and working with an unlicensed, untrained Loan Officer can cause you many headaches and hassles.
Simply put, Loan Officers at Banks, most Credit Unions, or Mortgage Companies owned by a bank are NOT REQUIRED to be licensed, take classes, take continuing education, or pass any state or federally mandated tests to be a Loan Officer!
It is hard to determine if a Loan Officer is fully licensed or simply a registered application clerk. When looking up a loan officer on the federal lender verification web site, you have to go to the bottom of their NMLS identification page and look under State Licenses/Registrations or Federal Registration heading.
Now I am not trying to make this into a David versus Goliath story, but I am trying to emphasize the huge differences between Loan Officer training and education. As the new licensing and testing requirements rolled out across the country, many Loan Officers who have been unable to meet the new requirements, and especially those who have failed the new tests, have simply gone to the large banks to work.
Here is a chart to show the differences:
I think the choice is clear. Who would YOU rather be working with on the largest financial transaction of your life? A fully trained, licensed, fingerprinted, and background checked Loan Officer - or the untrained, unlicensed Loan Officer at the bank?
The funny part is the cost for the service based on rates and fees are usually about the same, if not slightly cheaper in both rate and costs. Plus non-bank lenders usually close the loans faster, and have more knowledgeable and experienced Loan Officers.
Google the Loan Officer you are thinking of working with! Do you get any hits? What are they? Does the Loan Officer appear to be highly respected and quoted with lots of links? Then you are probably working with a professional. Can't find anything, or maybe just a listing on the company web site? That probably wouldn't be who I would pick to handle my largest financial transaction.
Here are FOUR SIMPLE QUESTIONS Your Lender Absolutely Must Be Able To Answer CORRECTLY. IF THEY DO NOT KNOW THE ANSWERS - RUN, DON'T WALK RUN TO A LENDER THAT DOES!
1) What are mortgage interest rates based on? The only correct answer is Mortgage Backed Securities or Mortgage Bonds, NOT the 10-year Treasury Note. While the 10-year Treasury Note sometimes trends in the same direction as Mortgage Bonds, it is not unusual to see them move in completely opposite directions. DO NOT work with a lender who has their eyes on the wrong indicators.
2) What is the next Economic Report or event that could cause interest rate movement? A professional Loan Officer will have this at their fingertips. For an up-to-date calendar of weekly economic reports and events that may cause rates to fluctuate.
3) When the Fed "changes rates", what does this mean and what impact does this have on mortgage interest rates? The answer may surprise you. When the Fed makes a move, they are changing a rate called the "Fed Funds Rate". This is a very short-term rate that impacts credit cards, credit lines, auto loans and the like. Mortgage rates most often will actually move in the opposite direction as the Fed change, due to the dynamics within the financial markets. For more information and explanation, just give us a call
4) What is happening in the market today and what do you see in the near future? If a Loan Officer cannot explain to you how Mortgage Bonds and interest rates are moving at the present time, as well as what is coming up in the near future, you are almost guaranteed to be talking with an application clerk, not a professional with whom to entrust your home mortgage financing.
First, IF IT SEEMS TOO GOOD TO BE TRUE, IT PROBABLY IS. But you didn’t really need us to tell you that, did you? Mortgage money and interest rates all come from the same bond market, all lender essentially underwrite to the same guidelines, and all loans have essentially the exact same closing costs.
If someone is quoting a significantly lower interest rate, or significantly lower closing costs, you better ask a few more questions and find the hook. Is there a prepayment penalty? If the rate seems incredible, are there extra fees? What is the length of the lock-in? If fees are discounted, is it built into a higher interest rate?
If you talk with four lenders, and three all same about the same, and one is magically significantly better - you didn't stumble of a great deal. You stumbled on a the biggest liar!
If you are looking for the cheapest deal out there, understand that you are placing a hugely important process into the hands of the lowest bidder. Would you ever want to travel in a car or airplane that had been built using the very cheapest materials, built by the very cheapest laborer? Probably not. Best case, expect very little advice, experience and personal service. Worst case, expect that you may not close at all. All too often, you don’t know until it’s too late that cheapest isn’t BEST. That being said – we are not the lowest quote you will see. Of course our rates and costs are very competitive, but we have also invested in the systems and team we need to ensure the top quality experience that you deserve. If you want the cheapest – head on out to the Internet, and we wish you good luck. But remember that this is the largest financial transaction most people will make in their lifetime, and that the cheapest rate on the wrong strategy can cost you thousands more in the long run.
When looking at various interest rates, closing costs, and APR, do you really understand the math between the various quotes? Don't worry, most people don't. A no closing cost mortgage isn't really no closing cost. The cost is hidden in a higher interest rate. A low interest rate comes with higher closing costs. The lowest APR absolutely does NOT mean the best deal. Since lenders know that many consumers are not educated in the process, they quote based on APR, which is easily manipulated, and worthless as a tool of loan comparison.
This means that you can have any interest rate that you want – but you may pay more in costs if the rate is lower than the norm. On the other hand, you can pay discounted fees, reduced fees, or even no fees at all – but understand that this comes at the expense of a higher interest rate. Either of these balances might be right for you, or perhaps somewhere in between. It all depends on what your financial goals are. A professional lender will be able to offer the best advice and options in terms of the balance between interest rate and closing costs that correctly fits your personal goals.
This means that if you are comparing lender rates and fees – this is a moving target on an hourly basis. For example, if you have two lenders that you just can’t decide between and want a quote from each – you must get this quote at the exact same time on the exact same day with the exact same terms or it will not be an accurate comparison. You also must know the length of the lock you are looking for, since longer rate locks typically have slightly higher rates.
As you can imagine, we wouldn’t be encouraging you to shop around if we weren’t pretty confident that we feel that we can give you a great value and serve you the very best.
More than likely, this is one of the largest and most important financial transactions you will ever make. You might do this only four or five times in your entire life but we do this every single day. It's your home and your future. It's our profession and our passion. We're ready to work for your best interest. Thank you for giving us the opportunity.
|Equal Housing Lender||
Wentworth Ave E - Suite 290
Our services available only for properties located in Minnesota, Wisconsin, and South Dakota. Licensed as Mortgages Unlimited, Inc. NMLS # 225504. As a Lenders One partner, we are part of the 3rd Largest Retail Mortgage Originators in the country. We are consistently ranked as one of the top mortgage lenders in Minnesota by Minneapolis St Paul Business Journal. Any use or duplication of any materials is strictly prohibited. All images, text, and materials © 1998 - 2018 Joe Metzler. This is the private web site of Joe Metzler, NMLS #274132. All Rights Reserved.