Who is a Loan Originator and How Do They Help You Buy a House?
A Loan Originator or Mortgage Loan Originator (MLO) is one of the first professionals most buyers meet in the home buying process. The MLO has two jobs; the first is to persuade you that he or she is the person that has the knowledge and ability to handle you loan application successfully. The second is to guide you through the process to a successful closing. Remember that a Loan Originator is a salesperson first and a guide second.
If you search the internet for the term “loan originator job description” you may well come across the result from study.com which says that in the sales capacity a MLO may, “…use marketing and advertising techniques like telemarketing, referrals, seminars and flyers to locate potential borrowers.” It goes on to say that, “An originator assists the borrower in determining the proper loan program, completing the loan application and gathering the necessary paperwork, including pay stubs, tax returns and bank statements, to begin the loan process. A credit report is obtained and analyzed by the originator. During the mortgage loan process, the mortgage originator communicates with the appraiser, title officer, escrow officer, loan processor and underwriter.”
Notice that their first or main job duty is sales. Why is that?
Most MLO’s are paid by the company they work for a commission based on the amount of your mortgage when it closes. That said, if you don’t get the mortgage, they don’t get paid. There is a strong incentive for the MLO to give you sound, useful advice. When you do well they do well, so they will be honest in their opinions. If they tell that your credit score needs to be improved to qualify for a loan, believe them.
Of course each MLO is going to try to convince you that their bank, credit union, or company is the best for you to work with. Here is where you can–and should–seek outside advice. Talk to your Realtor, often they have worked with a number of MLOs and will help you pick the best for your situation. They know which MLOs their prior clients were happy with and which ones they were not. Most importantly they know which ones will make it to the closing table and which ones won’t.
An MLO needs to filter the information you provide, gather all the information needed to process your loan is correctly, prepare that information, ensure it’s integrity, and pass it on to the underwriter.
Think of it this way: Your agent and your MLO are co-captains of the real estate transaction. They are coordinating the activities of the attorneys, listing agent, appraisers, underwriters, home inspectors, and others. They each want the same thing–to get you the home you want.
Working hand in hand, with them, in a mutual and trusting relationship is the best way to get a mortgage approved and get you into your new home.
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