What is a Mortgage Originator?
Getting a home mortgage to buy a home involves many individuals, especially in the loan origination process. A mortgage originator, also known as a loan officer or mortgage banker, is the main point of contact for most borrowers during the home loan process. Most loan originators work for banks and other lending institutions, but there are also independent loan officers. All mortgage originators must be registered and licensed in the state in which they offer home loans.
Function of a Mortgage Originator?
Loan originators have many functions during the mortgage process. Their two most important roles include salesperson to persuade you to choose their lender and guiding you through the borrowing process.
Originators work with a team of individuals, including the borrower, loan processors, underwriters and closers. When you first begin working with a loan officer, he or she will walk you through your options, help you understand how much you can borrow, what type of interest rate you can receive, and review your finances to determine which loan option will best fit your needs. Your loan officer will review your financial background to determine whether you are a good candidate. This will include checking your credit reports, analyzing your debt-to-income ratios and communicating with the lender about your creditworthiness to determine proper loan terms and the interest rate.
The loan officer will also determine whether your loan application can be approved and whether you have sufficient documents to begin underwriting. It's important to be upfront and honest with the mortgage originator, because he or she can help you address any problems with your credit or borrower profile. Loan officers are paid a commission when the loan closes, so they have incentive to get your loan application approved.
Mortgage originators are often confused with mortgage brokers, but there is an important difference. A mortgage broker works with borrowers to find the best mortgage for their needs from any lender. At closing, the broker receives a percentage of the loan amount. Loan officers are instead employed by a single lender to work with borrowers to find a loan from their institution. A loan officer receives compensation from the lender, his or her employer, not the borrower.
Loan Officers, Processors, and Underwriters
The loan officer is just one of several people involved in ultimately getting your loan application approved and closing the loan. You will first make contact with the loan officer and work with him or her throughout the process. Your mortgage originator will work with the loan processor and underwriter behind the scenes.
Once your application is completed with the help of the mortgage originator, it will pass to the loan processor. The loan processor's job is verifying the information you have provided on your application, including your employment status, income, outstanding debts and your assets. Your income will get special attention, as the lender wants to make sure you can afford the mortgage. Your loan processor will also make sure you have homeowners insurance.
During the processing stage, the processor will order your credit report to determine your willingness to pay. A home appraisal will also be ordered to make sure the home is worth at least as much as the loan amount. Payoff information will also be requested if you are refinancing your mortgage.
When the loan processor finishes verifying your information, it's sent to the underwriter. The underwriter will double-check your financial information and request clarity on any gaps or inconsistencies in the application. Your loan officer will let you know if any additional information is required.
The underwriter looks at three key factors on your application: capacity, or whether you have the means to pay your debts by checking your income, current debt, assets and debt-to-income ratio; credit, or whether you have a good repayment history; and collateral, or the value of the property you are financing.
The underwriter ultimately approves or denies your loan application.
Finding a Mortgage Originator
Working with a loan originator over a broker comes with several advantages. When you work with a mortgage officer, you will cut out the middleman and work directly with your lender. Most originators work for lenders, so your first stop should be choosing the right lender that offers home loan programs to fit your needs, whether you want an FHA loan, VA loan or conventional home loan.
What to Look for in an Originator
You can start by researching the loan officer's company. Choose a lender by checking its Better Business Bureau ratings and online reviews. Make sure you choose a loan officer you feel comfortable with, as he or she will be your source of contact with the lender until closing. You may also want to choose a loan officer who has experience dealing with borrowers in your situation, which may include credit problems, first-time home buyer, jumbo loan borrower or self-employed borrower.
During your initial meeting, ask loan officers how many years of experience they have, how long they have been with the company and how many loans they have done in the loan program you have chosen.