Borrowing 101
In honor of the adoption of Fannie and Freddie by our government and its taxpayers, I am dedicating this week to a future of intelligent lending practices. May borrowers smarten up and may lenders be fair!
Borrowing 101
What’s a mortgage broker and how is that job different from a loan officer?
A mortgage broker represents many different lenders (banks, mortgage companies, private investors) similar to the way an independent property casualty insurance agent has the ability to price car or home insurance with different insurers. A mortgage broker arranges loan with mortgage lenders. Lenders provide the actual funds. A loan officer or loan originator is just a title for someone who works for a mortgage broker or a lender/bank.
How does a loan officer get paid?
He/she is a commission-based sales person. There is a commission built into your loan, which your loan officer gets at closing.
What is his/her job?
He/she is paid to find qualified borrowers and to prepare documentation to show that the lender is taking an acceptable risk.
Who will see my personal financial information?
Your financial information will not be published, but it is open to employees of the lender involved in closing your loan.
What is a processor?
That’s the person who works for the mortgage broker or lender and verifies the paperwork provided by the borrower and prepares the loan file for submission to the underwriter.
What does the bank appraiser do?
He/she has your Purchase and Sales Agreement in hand. His/her job is to determine if the purchase price is supported using previous sales data. This is to protect the lender by verifying that the loan amount is reasonable for the property secured by the mortgage. The bank appraiser does not evaluate whether you got a good deal on your house.
What does an underwriter do?
An underwriter looks at the entire record to fully vet the borrower. The final word on whether you get your mortgage comes from the underwriter.
