We commonly see confusion, especially from the first time homebuyer, on the difference between a Loan Officer and a Mortgage Broker. When looking for a new home, its critical that you have your finances set up and in place. Having your mortgage ready to go make the hombuying process much easier.
Although both Loan Officer and Mortgage Broker both have to get their licenses from the Nationwide Mortgage Licensing System and both have to take NMLS Continuing Education, that is about where the similarities stop.
What is a loan officer?
According to Forbes.com, a loan officer’s job is to accept an application that the borrower has filled out, and then hand it off to the underwriting department.
“An independent loan originator, on the other hand, typically renders more services to the borrower, including things like advising the client about the best loans available for their specific purposes, gathering required documentation throughout the process, ordering the appraisal and communicating directly with the underwriter to ensure that the loan gets approved,” writes Forbes.
According to Loanvest.com, a mortgage loan underwriter is tasked with carefully analyzing every bit of information the loan officer asks you to provide as part of the loan application process, as well as the collection of verification documents that you may be required to send in later to substantiate the information you’ve already provided. The underwriter will then attempt to verify two primary things in order to meet the bank’s criteria for offering you a loan: general creditworthiness and debt-to-income ratio.
What is an Undrwriter?
A large bank or credit union relies on the underwriter, or underwriting department, to handle all of the above tasks—and these departments aren’t working as representatives for the borrower. The takeaway for the consumer: Mortgage rates available at an independent loan originator, whether a broker or a small banker, will not be higher than those offered through a larger bank. In fact, in many cases, the rates may be somewhat lower, partly because independent mortgage brokers typically have more loan sources available to them compared to the big banks, which usually just have a handful of loan products to offer prospective homeowners, according to Forbes.com.
“For instance, mathematically, paying 1% of the loan amount to reduce the rate by .25% will break even in about four years, but it seldom makes sense unless the borrower plans to use the lower rate to pay off the loan faster. As far as fees are concerned, you have to make a distinction between lender fees (underwriting, document prep, processing, etc.) and third-party fees (title, escrow, appraisal, recording, notary). Some lenders and brokers have very high lender fees, while others may have higher rates instead,” says Forbes.com.
What is a Mortgage Broker?
A mortgage broker is an independent real-estate financing professional who specializes in the origination of residential mortgage loans. Mortgage brokers normally pass the actual funding and servicing of loans on to wholesale lending sources. A mortgage broker is also an independent contractor working with, on average, as many as forty lenders at any one time, claims the EducatedMortgageServices.com website. “By combining professional expertise with direct access to hundreds of loan products, your broker provides the most efficient way to obtain financing tailored to your specific financial goals,” according to EducatedMortgageServices.com.
What top factors determine if someone gets a loan?
Forbes.com says, the most important thing is the debt-to-income ratio (DTI), which is calculated by taking the total house payment (principal and interest, taxes, insurance and mortgage insurance, if applicable), adding all “long-term” debt payments (any that will continue for more than 10 months), and then expressing that sum as a percentage of the gross monthly income. For a conventional loan, 50% is the maximum value, but some loan programs may allow a higher DTI.
That’s why you need a mortgage broker to act as a liaison between the title and escrow company, real estate agent, lender, appraiser, credit agency, the underwriters, the processors, attorneys, condo associations and any other services which may affect your transaction.
EducatedMortgageServices.com says a mortgage broker also:
- Discusses and explains financing program options
- Informs you, in writing, of lock-in options
- Explains all documents of the loan application
- Explains all associated costs of the loan application
- Explains the disbursement of all loan applications
- Reviews the condo documents
- Explains the loan process, from application to closing
- Provides you with a good faith estimate of cost and fees
- Communicates with you throughout the loan process in a timely manner
- Coordinates the final closing of your transaction
Some loan officers do offer credit repair consulting for a fee, according to OwnerFinanceAtlanta.com.
“For many home buyers, this is a smart way to get the assistance they need. Also, putting a price tag on the repair takes away some of a loan officer’s concerns about your commitment to improving your credit. If your loan officer offers such a program, you’d be wise to consider it.”
Working on Fixing Your Credit
Sit down with your local real estate agent and loan officer (even if it costs you) for a strategy session, OwnerFinanceAtlanta.com recommends. Get them to make three or four specific suggestions that you can take action on over the next 6 months. Then, go and do the tasks suggested. Come back in six months for another session to check your status and get suggestions for the next six months. Step by step, you’ll eventually reach your credit goal and be on your way to purchasing your new home.
Change Your Career by Attending the Best Real Estate Schools
If you feel that your current career is unfulfilling in any way, it is time you gave selling real estate a chance. Not only will you be your own boss, when it comes to income the sky is the limit. Starting a business is not easy, but the process of getting a real estate licenses is not. That said, to get into a real estate career you have to go to real estate school so that you can get a license. There are many of these so it is important that you know the qualities of the best real estate schools.
Choose Your Real Estate School Wisely
The best real estate schools use experienced and seasoned instructors to deliver lessons. They will teach you how to get new clients, how to get listings, how to work with other REALTORS to buy and sell homes, how to maintain your own books and everything else that you need to know to get your real estate license.
The best real estate schools do more than help you get your license – they offer continuing education to ensure that their students stay current with the latest real estate selling and buying techniques. They will have a curriculum based on a wide variety of topics and it is up to you to check regularly and pick courses that you feel will be beneficial.
Tips on Passing the Real Estate Exam
Options for Getting a License
Many people do not have time to attend brick and mortar real estate schools. If that is the case, the best schools develop online courses that claim to be just as good as the live real estate classes to help get your real estate license. You will have course material, research material, assignments and you will also have access to your instructors in case you have questions. They also provide chat rooms within these courses to facilitate discussions between students.
As you look at real estate schools make sure to compare licensing fees. This is not to say that you should go for the cheap ones, but rather that you should choose a school that you can afford that offers excellent real estate courses.
Success in Real Estate
Once you become a successful real estate agent and are earning a six figure income, you can enjoy the luxuries of life. You can spend your time in your luxury home on the golf course, flying in your private jet or renting a charter boat to fish for yellowfin tuna. The world is your oyster! But first…you have to get that license!
Getting a Real Estate License
Real Estate Schools
Online Real Estate Classes
A Career in Real Estate
Real Estate Exam Preperation
Get Your License Today!
Do you want to break into the wonderful world of real estate sales? Are you looking to become a real estate agent? We are now accepting applications to become a real estate agent in all 50 states!
The first step in becoming a REALTOR is to take the required classes. We Center School of Real Estate is licensed in all 50 states to provide the pre-licensing to take your real estate test. Once you take your real estate test, you can then take your state exam. Once you pass your state exam, you with then have your real estate license.
Within the first 180 days of passing your real estate exam, you will need to take additional post licensing education. If you fail to do so, you will LOOSE your license.
Online or In Class Courses Available
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