You just called your local mortgage broker and have just hung up the phone after a 20 minute conversation with a loan officer. Now what? What does a loan officer do? What do you do?
Do you call another mortgage company or do you wait until you hear back from this one to see if you like what they say? No matter what you decide to do, you should know what a loan officer is going to do about your loan request so that you know what to expect and do not get taken advantage of. This is especially true if you are a first time home buyer.
Loan Officer Has To Get Your Credit Report First
Once your loan officer has completed their initial interview with you, also known as a pre qualification, they will review everything you told them and enter your information into their loan system. Most companies keep track of every loan inquiry for liability reasons and to conform with federal and state regulations.
In order for your loan officer to give you accurate interest rate quotes and programs they will have to get a copy of your credit report from their credit provider. If you have a copy of your credit report then that will help you talk to your loan officer about your credit, but your loan officer must use their own credit report to put your loan together. You may also let several loan officers from several companies get your credit report without hurting your credit or credit scores. See: What Happens To My Credit Score If I Shop Around For A Mortgage?
Loan Application, Disclosures, Good Faith Estimate, and Truth In Lending
During these initial steps, you should receive some loan paperwork from your loan officer that include a good faith estimate, a truth in lending statement, a loan application and other loan paperwork and disclosures. You may also receive a loan comparison worksheet showing you different loan options. Your loan officer should not tell you what loan you are taking, but rather give you some choices to help you decide what’s best for you.
For sure, within three business days from when you apply for a purchase mortgage and you already know the property address, or apply for a refinance mortgage and give your loan officer your property address you should get a good faith estimate and truth in lending statement from your loan officer. You should use these documents to compare loan offers from different loan officers, or you could even use these documents to compare different loan programs from the same loan officer. Review Good Faith Estimates and Loan Expenses You Should Expect.
Loan Officer Collects Loan Paperwork From You
Assuming that you have picked out a loan officer - see Questions To Ask To Help Select A Loan Officer and you have decided on a loan program, your loan officer or their loan processor might give you another loan application and some additional paperwork and disclosures specific to the loan that you select for you to review, sign and give back to the loan officer or their processor.
There is nothing really set in stone about exactly how this should be done and it is typically left up to individual company policy. Along with this paperwork your loan officer should be asking you for your financial documents like pay stubs, bank statements, W2's, perhaps your signed sales contract if you are buying a home, or your old loan paperwork if you are refinancing. You want to get all this paperwork back to your loan officer as soon as possible to give them most time possible on your loan.
Loan Officer Reviews Your Paperwork and Turns It In For Underwriting
Once your loan officer gets your paperwork, they should go through it very carefully making sure that income figures match, bank statements match etc. What you give to the underwriter must match what is on the loan application and other paperwork. It is your loan officer's job as well as the loan processor's job to make sure everything is a match and fits the story on the loan application. Once everything matches, your loan file will get turned into underwriting for approval.
Loan Officers Lock Loans
Please see GetPreQualified.com's article on Mortgage Loan Interest Rate Locks for more information on this topic. Suffice to say that one of the duties of your loan officer will be to lock your interest rate with your lender. The rate lock will guarantee your interest rate as long as you sign and close your loan before your rate lock expires. As a borrower, you definitely want to pay attention to your rate lock expiration date to make sure that you close your loan and that your loan funds on or before your rate lock expires. You'll want to keep in touch with your loan officer about this very closely as your loan progresses, especially if there are any slowdowns on your loan with getting it approved.
Underwriter Gives Approval Or Needs Additional Information
An underwriter will match everything that is sent to them on your loan file. If everything is a match and you meet the loan program guidelines then your loan is approved. If the underwriter needs anything clarified, or additional information they will ask for it now. Your loan officer will work with the processor to get any additional items needed. In some cases they may have to come back to you for more information as well. Sometimes this happens a few times because everytime something new is given to the underwriter they may come up with something else that they want to see. So be patient here and get what you are asked for; it will make things go a lot quicker and easier.
Underwriter Gives Final Loan Approval
When the underwriter is completely done reviewing your file and they do not ask for any additional information, they will give your loan file a final approval. This is great news because it means that you can get your mortgage soon. If you are purchasing a home, your loan officer will let everyone know that all things are approved and that from your perspective as a buyer you're ready to go. Everyone likes this kind of news. If you are refinancing your loan officer will contact you about when you want to sign your mortgage loan documents. Typically this whole process from when you get your final approval to getting loan documents to sign will take just a few days.
Loan Closing And Loan Funding
If you are refinancing your loan your loan officer will help coordinate when you are going to sign your loan documents. They might be using their loan processor to do a lot of the communicating with you, but always know that your loan officer is not very far from the processor and if you need to speak with the loan officer you should be able to do so pretty easily. When you go in to sign your loan documents your loan officer may or may not go to your loan signing, but they will only be a quick phone call away if you have any questions.
For a purchase transaction, loan officers again sometimes go to their loan signings and sometimes not. If you want them to come to your signing just ask them to. If you ask, they will probably come. But again, if they are not there be confident that they are most likely just a phone call away to answer any questions that you might have.
This about covers it. It is actually pretty tough to say exactly what a loan officer does. Loan officers work for many different companies which have so many different policies and ways of doing things. Also, there are different types of rules and regulations that loan officers must follow depending on what state they are in, or for whom they work. What is important is for you to get a general sense of what they are doing behind the scenes when they are not talking to you. With this knowledge you will be able to ask better questions and be able to stay on top of what is going on with your loan.
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