Before you start looking for a home, you will need to know how much you can actually spend. The best way to do that is to get prequalified for a mortgage. To get prequalified, you just need to provide some financial information to your Lending Professional, such as your income and the amount of savings and investments you have. Your lender will review this information and tell you how much they can lend you. This will tell you the price range of the homes you should be looking at. Then, you can work towards a full preapproval for credit, which involves providing your financial documents (W-2 statements, paycheck stubs, bank account statements, etc.) so your lender can verify your financial status and credit.

Homebuyers often do not understand the difference between a mortgage broker and a loan officer. A loan officer works directly for a lender while a broker is an independent party that does not work for anyone. In this way a broker can seek out loans from many different parties and represent only you, not the entity providing the funds.

What is a Loan Officer?

A loan officer works directly for a bank or other lender; therefore a loan officer often considers the best interest of their employer, not the homebuyer. A loan officer is not required to have a license to work in the mortgage industry.

What is a Mortgage Broker?

A mortgage broker, on the other hand, must be licensed. They are an independent worker that acts as the “middle man” between the homebuyer and the lender. Mortgage brokers are recommended for homebuyers with poor credit or those wanting to negotiate the best terms on their loan. Mortgage brokers do not get paid unless they close on a mortgage; therefore, they will work diligently to provide the borrower with a satisfactory loan.

Should I Work with a Loan Officer or a Mortgage Broker?

One benefit of working with a loan officer is that there is no “middle man.” This often results in a speedier loan process because documents do not have to pass through an extra source. Mortgage brokers, however, can provide more mortgage options for borrowers because they are not tied to a single lender. 

Another con to a loan officer could be higher fees, whereas a mortgage broker will shop rates to see who will give you the best deal. Mortgage brokers work for you, not a specific institution. On the flip side, at times a loan officer would be the best route to take. For example, if you have been a long time member of a specific institution, or at times specific institutions will give lending specials (such as no broker fees) which could save you a chunk of money at the closing table.

Another thing to consider is loan type and credit score. Not every lender/broker can provide every type of loan. Some can work with lower credit scores, some can provide only a couple down payment assistance programs, while others carry all government assisted programs. If you fall under this category, ask us which professionals handle these items.

I suggest speaking to both types and see where your comfort lies. Here are several options below. My clients have reported favorable results with each. If I receive bad testimonials I remove them from my list.

Let us know once you have chosen a lender to move forward with. It is important for us to update your search according to their restrictions to keep you out of trouble.  

They will ask you for items to get you completely approved. Until you do this, you are at risk of not being competitive against other buyers on the home hunt that are as far in to their loan process as they can be without being under contract. If you want to get a jump on collecting the information they will ask for, see below. Its sometimes frustrating finding everything they need, but definitely well worth the effort. If you dont start the race, youll never cross the finish line!

Loan Application Information Required

Regardless of whether the application is in the paper format, an online form, or done verbally with your loan officer, this may be some of the information you’ll need to provide, including:

• Full name, birth date, Social Security number, and phone number
• Marital status, number of children and ages
• Residence history for at least two years. If you’re a renter, your rent payment is needed. If you’re an owner, all mortgage, insurance and tax figures are needed for your primary residence and all other properties owned.
• Employment history for at least two years, including company name(s), address(es), phone number(s), and your title(s).
• Income history for at least two years. If you receive commissions, bonuses, or are self-employed, you must provide two years of bonus, commission, or self-employed income received. Most lenders average variable and self-employed income over two years.
• Asset account balances including all checking, savings, investment, and retirement accounts.
• Debt payments and balances for credit cards, mortgages, student loans, car loans, alimony, child support, or any other fixed debt obligations.
• Confirmation whether you’ve had bankruptcies or foreclosures within the past seven years, whether you’re party to any lawsuits, or you co-sign on any loans.
• Confirmation if any part of your down payment will be borrowed.

There may be more as you go along, but this will take the bulk of your document collection away for you.

Good luck and keep us updated!