What is a lender or loan officer?

Dated: April 26 2022

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Guest Post by Ryan Wise - Mortgage Loan Officer at Cherry Creek DTC | NMLS #2151319

Have you ever felt confused with all of the professionals involved when it comes to a real estate transaction? It's because there are several! There are Realtors, appraisers, title companies, mortgage companies, inspectors, etc. What I am getting at is that it takes a village to buy a home. Whether you are buying your first home or buying your fifth home, you are going to need some sort of financing for the purchase unless you are paying cash. If you are on your fifth home, then you should already know what a lender is. However, if you are going through the process for the first time, then you may have no idea what a Loan Officer is. Lucky for you, you are about to learn everything you need to know about lenders in this short blog post!  


“What do loan officers do?” 


As I briefly mentioned above, a loan officer/lender is the person/company that you go through to secure financing for the purchase of your new home. Mortgage loans are extremely complicated, as no two loans are the same. Each loan program has different guidelines and restrictions/benefits that the borrower (you) must meet to qualify. It is the job of the loan officer to firstly ensure that you qualify for a loan, and secondly to walk you through your options for a mortgage and explain the pros/cons of each option to find the loan that best suits not only your needs for the purchase, but for your long-term financial goals. 


I’ve heard many different terms for a lender, and it confuses me. Mortgage broker, mortgage banker, loan officer, loan originator, MLO, mortgage advisor, loan consultant, etc. Why are there so many names and are there any differences?” 


The answer to this is simple. They basically all mean the same thing, but there are a few distinct differences that you need to be aware of. The “lender” is the company that you go through to get the loan. The “loan officer” is the person within the company that you work with directly to get qualified and review your loan options. He/she is your main point of contact throughout the transaction, the “quarter back” of the loan if you will. There are two different types of loan officers: mortgage brokers and mortgage bankers. A mortgage broker is a loan officer who negotiates with multiple different lenders on behalf of their client to find the best deal for them. A mortgage banker is a loan officer who works directly for one lender and works with the client to get the best deal based on the options that their company offers in-house.  


“If a mortgage broker has more options, why would I ever work with a mortgage banker?” 


Great question! There are pros and cons to both. The main pro with a mortgage broker is that you can sometimes get a better interest rate due to having more options. The con to working with a mortgage broker is that they have less control over the transaction because they are brokering the loan out to a third party. This can cause delays in the transaction and make the approval process more difficult not only for the loan officer, but for the client as well. A mortgage banker on the other hand has more control over the entire transaction, from origination to funding. Turn times can be faster and since the mortgage banker most likely has built rapport with the loan processors/underwriters reviewing the loan, the approval process can be much smoother. The con to working with a banker is that they may get beaten out on interest rate by a broker.  


“Ok, that makes sense. Since there are pros and cons to both, who should I go with?” 


There is no right answer to this, it is completely subjective. Unfortunately, there are bad eggs on both sides of the spectrum. Sometimes a better interest rate does not mean a better deal if the process is a nightmare. And vice versa, sometimes having more control over a transaction doesn't mean a better deal if the mortgage banker is not doing his/her job to the best of their ability. You should interview both and find the right person that fits you and your goals. At the end of the day, people most enjoy working with people whom they like and trust. Find whatever loan officer is going to do the best job, give you the best service, and get you the best deal.  


“Are there any types of loan officers to avoid?”  


This also is subjective. If you care about having excellent customer service and a good experience, then you should probably go with a loan officer that works off referrals. Some companies will feed leads to their loan officers, and thus they do not have to go out and generate new business. While they can still get the deal done, they may not feel the need to go above and beyond in their service because they know that no matter what happens, they will have new leads coming in to work with. A loan officer who has to fight for their deals and lives off referral business will most likely give you a better experience, because if they do a bad job then no one will send them referrals. This theory entirely depends on the specific loan officer you work with and of course, there are exceptions. So, interview whomever you work with extensively beforehand to ensure that you have the right person advocating for you! The worst thing that can happen is to lose out on a home because of a bad loan officer.  

Have more questions about the loan process or want to see how much you qualify for? click here to get in contact with me.

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Callie Ammons

Hi, my name is Callie Ammons and I’m a Realtor in the stunning state of Colorado, specifically serving the Colorado Springs area. Growing up in a family with Realtor grandparents, a father who’s a....

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