Loan Officers: Their Role In Your New Home Purchase
Introduction Very few people who are buying a house, especially if this is their first residence, can afford to pay the entire buying price in lump sum form.
Most often, the buyer needs to take out a loan of some sort in order to pay for all or part of that price and that is where a loan officer comes into play.
This article will outline the role of this professional in the home purchasing process.
(In some places, incidentally, the title for the profession is mortgage loan originator.
) Guiding the home buyer The number one function of a loan officer is to guide the buyer through the process of purchasing his or her new house.
He tells the buyer what to bring with him when filling out loan applications and other forms.
He also answers any questions that the buyer may have and ensures that the loan goes through every department of the mortgage company as quickly as possible.
The training of a loan officer ensures that he is conversant with every mortgage lending function.
One of the first things that a loan officer will do is have the client sign a form that will allow him to obtain the credit report of the latter.
He or she will then use these documents to verify his client's income and employment history as well as the market value of the house being bought.
The loan officer also examines the buyer's cash, stocks and other assets in order to make sure that the client will have enough money to cover both the down payment and the closing costs.
Because the officer needs to have a clear picture of his client's current financial situation, the client should not make any large deposits or withdrawals to his or her account without letting the officer know and also providing clear records of cash flows.
Likewise, it is not advisable to make any major purchases by credit card as these could adversely affect the ratio of his debt to his income.
Terms used by loan officers Like anyone who works in a specialized field, a loan officer will use many technical terms relating to that specialty that are not familiar to the layman.
Some of them include:
Most often, the buyer needs to take out a loan of some sort in order to pay for all or part of that price and that is where a loan officer comes into play.
This article will outline the role of this professional in the home purchasing process.
(In some places, incidentally, the title for the profession is mortgage loan originator.
) Guiding the home buyer The number one function of a loan officer is to guide the buyer through the process of purchasing his or her new house.
He tells the buyer what to bring with him when filling out loan applications and other forms.
He also answers any questions that the buyer may have and ensures that the loan goes through every department of the mortgage company as quickly as possible.
The training of a loan officer ensures that he is conversant with every mortgage lending function.
One of the first things that a loan officer will do is have the client sign a form that will allow him to obtain the credit report of the latter.
He or she will then use these documents to verify his client's income and employment history as well as the market value of the house being bought.
The loan officer also examines the buyer's cash, stocks and other assets in order to make sure that the client will have enough money to cover both the down payment and the closing costs.
Because the officer needs to have a clear picture of his client's current financial situation, the client should not make any large deposits or withdrawals to his or her account without letting the officer know and also providing clear records of cash flows.
Likewise, it is not advisable to make any major purchases by credit card as these could adversely affect the ratio of his debt to his income.
Terms used by loan officers Like anyone who works in a specialized field, a loan officer will use many technical terms relating to that specialty that are not familiar to the layman.
Some of them include:
- adjustable mortgage rate: a class of mortgage whose interest rate depends on a specified benchmark
- FHA (Federal Housing Administration) insured loan: a federal assistance mortgage loan in the United States insured by the FHA
- floor: the lowest limit that can be accepted by both parties involved
- private mortgage insurance - Also known as lenders mortgage insurance, PMI is "insurance payable to a lender or trustee for a pool of securities that may be required when taking out a mortgage loan" in case the mortgager cannot repay it.
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