Avoid choosing the wrong loan officer
A finding by J.D. Power that 21 percent of home buyers regret their choice of a lender — the dismayed first-time buyers were a shocking 27 percent — is probably misplaced.
It’s far more likely that displeased purchasers were not happy with their particular loan officers, as opposed to the companies they work for. But it shouldn’t really matter who’s to blame for their unhappiness.
What is important, especially to future buyers, is that unhappy borrowers made an average of nine negative comments in the research firm’s annual mortgage satisfaction study.
That in itself is regrettable. But this significant minority might have been able to avoid many of their issues if they had been more careful in picking who they worked with for financing in the first place.
Whether dealing with a loan officer who works for a lender that actually funds its own loans, or a broker who works for himself and deals with more than one lender, you should expect him to be responsive, according to the Consumer Financial Protection Bureau, the federal watchdog agency that grew out of the recent financial crisis.
If he’s not, said Sue Woodard of Vantage Productions, a Minnesota sales and marketing firm that supports professional development in the mortgage field, you should have no qualms about jettisoning him and going elsewhere.
If you are wedded to a particular company, ask for the manager and tell him you want to deal with someone else. But if you’re not, then “leave and leave quickly,” Woodard said. “There are too many good people out there willing to do it right, so run and run fast. It just frustrates me to death that on something so important, people don’t pick up and move on.”
Being responsive is a key trait. But according to a recent survey of some 800 companies by Insellerate, a provider of support services for the marketing and sale of mortgages, it took an average of 12 hours for loan officers to answer a client’s query. But that’s just among those who responded. A whopping 57 percent never responded at all, the survey found. And 60 percent of those who did respond failed to follow up with a second call.
Woodard said you should expect prompt responses to your requests for information “right out of the gate.” If there’s some kind of crisis, the reply should be immediate. Otherwise, 24 hours is acceptable.
You also should be provided with a clear analysis of the different loan options that are available, along with an understanding of how they impact you financially, both initially and over time. Even more importantly, you should expect that the choices be explained in a way you can understand.
Choosing a mortgage is one of the biggest financial decisions you will ever make, so if you ask for a simple explanation and you don’t get it, ask again and again until you are certain you understand.
It’s also wise to make sure what you choose is suitable to your lifestyle and financial picture. Many loan officers qualify people for the biggest mortgage they can afford. But while there’s nothing wrong with that, you may not be comfortable forking over that amount every month.
You want to match your monthly payment — not just principal and interest, but also homeowner’s insurance, taxes and homeowners association fees — to how much you can afford to pay. Stretching a bit, perhaps, but not to the point where you are living hand-to-mouth.
Loan officers can’t predict whether interest rates will rise or fall. But they should be able to tell you where the market has been going in recent weeks. More importantly, you should be given general advice on whether to lock in your rate, and when, or let the rate float with the market.
You also should be given a method to easily and quickly check on the status of your application. That is, where it stands with underwriting, what papers are needed and which ones are still missing. Better yet, said Woodward, your loan officer should update you regularly and routinely during the sometimes-lengthy process.
On the flip side, if you fail to send a piece of requested information, you should expect the officer to hound you for it, or at least be persistent in asking for exactly what the underwriters need to approve your loan.
“They aren’t trying to make your life miserable or harass you,” Woodard said. “But if they ask for six things and just one is missing, your application can’t move on.”
Finally, if you’ve chosen wisely and your loan closes, don’t expect your loan officer to go away. A good one will be in contact during the transaction. But a great one will stay in touch long after, asking for repeat business, referrals and letters of recommendation.