How to Select the Best Loan Officer for You

Selecting the Best Loan Officer for You

About a week ago, I received a call from a client in the process of purchasing her very first home.  Her friend is also a first time home buyer, but the friend is a little farther along with the home purchase transaction and had just gone in to sign the loan documents.   My client called me in a panic because her friend discovered at the closing table that the fees came in over $2000 higher than her loan officer quoted.    My client' s question:   "Is this going to happen to me?"  

Another first time home buyer I am now working with began the home buying process using a loan officer he found on the internet.    He began shopping for homes and placed an offer.   When the realtor received the preapproval letter from the client's initial loan officer, it wasn't even a real preapproval.    When the realtor couldn't reach the loan officer by phone for several days, he asked his client to begin working with me.  

After just a quick review of the client's financial information, my first question to the realtor was:  "Did you ask for a credit towards closing costs for this client?"    The answer came back, "No, I didn't know I needed to."   I advised the realtor that the client didn't have enough funds to pay closing costs.   After verifying all the financial information, it turned this first time home buyer didn't even have enough funds for the down payment.

What both these clients didn't know was going to cost them.   The homebuyer in the first example is not going to be able to purchase that home after all because she didn't have the extra funds and didn't have a family member to gift her the money.    Very likely she will lose her Earnest Money Deposit.    An expensive mistake which was totally avoidable if her loan officer had advised her and her realtor correctly.

The second first time home buyer entered into the home purchase process totally unaware that there are substantial closing costs involved in purchasing a home.  He mistakenly believed his only monetary investment was his down payment.   Again, this was the responsibility of his loan officer to advise him of the cost involved and provide him with a Good Faith Estimate of all the fees and costs involved.     For him, the preapproval should never have been issued because he was not yet ready to purchase a home.   

When my homebuyer asked, "Is this going to happen to me?"  I was happy to tell her, NO.  I reminded her that we had talked about exactly these scenarios when we first met to sign the application paperwork.    I told her that my fees might look higher when you compare them to other loan officers, but I make sure that my clients have the complete picture.  We discussed how I disclose ALL the potential fees and costs of inspections on my initial Good Faith Estimate.   And when we sat down at the table to sign her loan documents yesterday, she was so happy to see that everything was exactly as I had told her,  no extra funds needed to close.

It may appear that the loan officer that issues the quick preapproval or gives the best sales talk is the better choice.  But I have had loan files sent over to me by realtors when the original loan officer couldn't get the loan closed.   They issued the quick preapproval and then I discover that the home buyer wasn't properly qualified and there was no chance that the home purchase would ever close, all because the loan officer didn't take more time and properly qualify the client.   

It is far better to work with a loan officer that is thorough in the loan preapproval process than to get the quick preapproval letter.   Imagine having given notice on the place you are renting and then finding out that you can't close on your home purchase.   Suddenly you could find yourself homeless and no where to go with a loan officer that won't answer the phone when you call.    Make sure the loan officer spends the time to answer all your questions and collects all the pertinent information to do a full and complete preapproval.  

Purchasing a home is one of the biggest financial decisions you will make and there is a lot of money involved.   Make sure you are going through the process with someone you trust, not just the person that quotes you the lowest rates and fees.    This is especially true for the first time home buyer who is unfamiliar with the process and the costs involved.