Are you planning on purchasing a home or refinancing your home soon? If so then you will need an educated, hard working, competent loan officer. But how do you find a loan officer with the right qualifications?
Getting the Wrong Loan Officer
First off let me explain to you the headache it can cause if you get a poor loan officer. You are putting all your eggs into one basket when you pick a loan officer. If you are using a broker the LO will select a bank, issue the paper work, follow up on conditions and pretty much has a hand in every aspect of the loan. Not to mention they will have access to all your personal information. If you use a bank the LO may or may not be as involved, but will have access and most the responsibilities as a broker.
If the LO is slow, a poor communicator, unorganized, doesn’t enjoy what they do, these things will make your experience terrible and frustrating.
I have worked along side some Loan Officers that I wouldn’t even trust to make me a sandwich, so choose wisely.
Where to start?
The absolute best place to start looking for a loan officer is with trusted friends and family. Referrals are the safest way to go. If you know someone that has had a bad or good experience talk to them. If you think you don’t know of anyone that can refer you to someone ask around, you may be surprised.
If referrals from friends and family don’t pan out check with a real estate agent. A real estate agent does a lot of work with loan officers and typically want to work with the best. Now you need to be sure the real estate agent isn’t a dud themselves, but otherwise they could be a great source.
It is okay to ask your prospective loan officer some questions before working with them. Here are a few questions you could ask…
- How long have you been a loan officer? – Experience can be a big factor.
- How many loans are currently in your pipe? – You want to ask this because you want someone who is moderately busy working on your loan. If you get someone who has 0 or 1 loan in their pipe the danger is that they don’t have enough to keep them busy and may have distractions elsewhere. Too many loans may mean they are too busy and won’t have time for you. A good loan officer typically has about 2 -12 loans going. Within that range is doable.
- How will you disclose Yield Spread Premium to me? – This is a question that will separate the best from the average. If you don’t know what yield spread premium is jump over and read our mortgage help post. Look for a loan officer that will fully disclose the details of the loan and give you a straight answer.
- What is your origination? – A good loan officer deserves 2% – 2.5% on the loan. Typically that is divided between 1% on the front (origination) and 1% – 1.5% on the back (yield spread premium).
- What has been the average amount of days to close your last 10 loans? – Now this could vary greatly because of the many different scenarios and condition of banks which are lending the money. 30 days used to be pretty standard, but 45 days has become more normal. This is due to more guidelines and regulations that the lenders are requiring. On normal purchases and refinance it should be in the 25 – 45 day range. Short sales and other types of loans may take longer.
- How often will you contact me? – The best answer you could hear is, “How often do you want me to contact you?”
- Now the big test is asking them to follow up with you once or twice by email and once by phone after the meeting is over. You have not agreed to anything yet, you just want to see if they will indeed follow up. Give them precise times to contact you. Something like, “Can you follow up and email me Tomorrow Morning around 10am, and can you give me a call in 2 days at 3:30pm?”
- This will test their organization and ability to contact you when you ask.
It is completely okay for you to interview prospective loan officers. If you had $100,000 to invest you would want someone who knew what they were doing. Well getting a good loan officer who can get you the best deal can save you thousands and thousands of dollars over the life of your loan.
If you have any tips, stories, or great loan officers in your area please leave us a comment. And if you are from Washington State we recommend Clark Davis from Mortgage Master.