How to Select a Loan Officer

First and foremost, find a lender you can meet with face to face! Do NOT use an out-of-state lender. The mortgage business is extremely competitive, and there are plenty of loan officers out there who will tell you anything just to get your application. Also, there are plenty of LO’s who are downright incompetent. Your home purchase may be the most important transaction in your life, so don’t entrust it to some unprincipled loan officer you met on the net. You need a qualified Minneapolis loan officer that is trustworthy and can give you solid advice. An out-of-state lender might not be familiar with Minneapolis real estate closing, causing problems and delay.

Things to Consider

1. Make proper comparisons. When looking at quotes, don’t just examine the totals. The only way to properly do this is to compare lender fees to lender fees, which, of course, are the only ones that lenders control. Disreputable lenders may misquote third party fees on the low side.

2. If it seems too good to be true, it probably is. Mortgage money all basically comes from the same place. If you run into something that sounds amazing, there is a hook hidden in there for you somewhere.

3. Understand the relationship between interest rates and closing costs. If you are quoted a low interest rate, there may be higher closing costs.

4. You get what you pay for. It’s a good idea to get competitive quotes, but if a quote looks absolutely awesome, don’t expect a smooth transaction. In fact, it might not even close at all. I have seen this happen more than once.

5. Rates can change hourly. Your loan officer needs to keep tabs on them so he can tell you when to lock in on the rate.

Is My Minnesota Loan Officer Competent?

Bookmark this page so you can refer to it when you interview Minneapolis loan officers.

These four questions will help you determine if the prospective loan officer is on top of the game:

1. What determines mortgage interest rates? If he/she says “ten year treasury note,” you should run away screaming. This is the wrong answer. The only correct answer is “Mortgage Backed Securities” or “Mortgage Bonds.”

2. What upcoming reports or events could cause an interest rate change? If you don’t get a clear answer, don’t sign those papers he passes to you. This person does not know how to analyze market trends.

3. What happens when Bernake or the Fed change interest rates? How does this affect my mortgage rate? This question separates the wheat from the chaff.

The Feds change a rate called the “Discount Rate” or “Federal Funds Rate,” which affect only short term rates that affect credit cards, car loans, etc. On the day that the Fed makes a change, mortgage rates actually move in the opposite direction of the Fed change. A good loan officer can explain to you why this occurs.

4.Do you get up-to-the-minute mortgage bond quotes? The only correct answer is “yes.” Someone who is using yesterday’s news will not be able to alert you to possible price changes.

Your REALTOR cannot require you to use a specific lender. However, if you have more specific questions, please don’t hesitate to call me at 651-230-4889

Possibly related posts:

1. What are “Points?”
2. Is This a “Safe” Minneapolis Neighborhood?