It’s a fair question. With the proliferation of online, highly automated lenders that claim all you have to do is “push a button” to get your mortgage, you might wonder why working with an actual flesh-and-blood loan officer is worth considering.
Let’s pretend for a moment that being able to look someone in the eye when you do business with them is NOT important to you. All you want is the Very Best Deal for your home loan to buy or refinance your home. What can a loan officer do for you that the computer cannot?
Even automatic mortgages have human approval
You should understand first that there is no such thing as a fully “pushbutton” mortgage. Every loan application is ultimately reviewed by an underwriter, who makes sure that the documentation for the loan matches up with the numbers on the application. The underwriter will also review the appraisal carefully to see if there are any conditions on the appraisal that would make the loan difficult to sell to the investor.
If you buy the premise of the ads—and they seem to be everywhere—a loan officer would seem to be an unneeded extra in the process.
In some rare cases, that might be true. There are some borrowers that we could describe as completely normal: a salary that stays the same from one month to the next, high credit scores, a home that is the same as others in the area, and nothing that could benefit from explanation.
A mortgage loan officer does more than just take information
A seasoned loan officer knows the underwriting process intimately. If there are aspects of a loan that need explaining so that the underwriter can review and approve the loan quickly, the loan officer will provide a detailed cover letter explaining all aspects of the loan, and gather any needed letters of explanation from you, the borrower.
The loan officer will always be proactive in gathering documentation for the loan. This not only saves time in the process, but it puts the loan application in a more favorable light in the eyes of the underwriter.
Everyone wants to get “the best deal” for everything. This is natural. One of the factors that determine the cost of a loan is what Fannie Mae and Freddie Mac, the two mortgage giants who own or guarantee a high percentage of loans today, call “risk-based pricing.” This means that a borrower’s credit score will determine the cost of a loan.
If a borrower with a 740 score can get a rate of 3.625%, a borrower with a 719 score would pay 3.75% for the same loan. Raising the score by just 21 points—not difficult to do—would drop the rate back down to 3.625%. That represents a difference of more than $10,000 over the life of a $400,000 loan.
There is also the matter of timing and rates. You may be aware that mortgage rates are constantly on the move. Some days, they move higher, other days lower. Economic conditions in the U.S. and in the world are part of what drive rates, but there are other factors that determine whether rates will move higher or lower in the coming days, weeks and months. A dedicated loan officer observes the movement of rates—and the forces that drive them—every day and can advise you whether you should lock your rate today or wait to see lower rates in the coming weeks.
This is not a trivial matter; in just the last two weeks, we have seen rates drop by nearly .25%. Taking a loan officer’s advice not to lock could get that lower rate, saving over $20,000 over the life of a $400,000 loan.
This is not to say that every good loan officer has a mortgage rate crystal ball; but in those cases where the likelihood of lower rates is strong, you may save money by taking a loan officer’s advice to take advantage of a favorable movement in the mortgage market.
When an underwriter approves a loan, there are conditions to be satisfied. Sometimes these are updated pay stubs or bank statements or letters of explanation for unusual circumstances. As loan officers, we are often able to persuade the underwriter to waive many of the conditions they ask for, or handle them on your behalf without having to delay the process or put an additional burden on the borrower.
Finally, there is the matter of personal contact. The mortgage process today is far more complex and involved than it was just a few years ago. There is new terminology, new disclosures and forms, and new procedures. As loan officers, we are committed to being a resource to our clients, available to answer the many questions that always arise during the course of a loan process.
Do you have a mortgage loan question that an experienced loan officer can answer? Contact us now by clicking the button below.