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How to Find the Right Mortgage Loan Originator

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How to Find the Right Mortgage Loan Originator


When you need to get a mortgage, regardless of whether it is for the first time or for a second home, it is easy to become overwhelmed with options. The mortgage provider you decide to partner with can significantly impact how much you pay each month and the remainder of your loan.

Purchasing a home is a huge investment with varying considerations you must keep in mind. So who can you turn to for more information? A mortgage loan originator.

If you are in the process of purchasing a home and you need help deciding on which mortgage product and lender is best for you, then this article was curated just for you. This brief mortgage guide will go over what a mortgage loan originator is and who you can reach out to for more help!

What Is a Mortgage Loan Originator?

A mortgage loan originator, also known as an MLO, is an institution or person who helps borrowers get the right mortgage they need. The mortgage loan originator is the original lender for the mortgage, and they help the borrower with their loan application. They are there to help throughout the entire mortgage loan process. A mortgage broker, loan officer, or lending company can serve as an MLO. 

Loan Officer

A loan officer is someone who acts as a mortgage loan originator. These officers may work as a mortgage broker or as direct lenders.

Loan officers ensure that you have the best loan options that meet your personal budget, finance goals, and preferred loan terms. Before you decide to work with any loan officer, you will want to make sure they meet the proper licensing requirements. 

Direct Lender

A direct lender is a private entity or financial institution that provides the loan for your mortgage. These lenders may be a bank or other type of financial institution such as a private lender or credit union. Some lenders operate online and deal specifically with financing mortgages for the public.

If you already deal with a specific bank, you may want to reach out to them for a mortgage loan. If you do not meet the requirements of your bank, you can always reach out to other reputable lenders who have proper licensing and years of experience. 

When you go through a direct lender, you will go through the same process as you would with a loan officer. The only difference is there is no middle man. A mortgage broker or loan officer typically acts as the liaison between you, the borrower, and the lending institution. 

When you go through a direct lender, the loan process may go much faster. Since you only deal with the direct lender, you will not have to wait for a middle person to relay any messages. If you have any questions or concerns, you can reach out directly to the representative from your lender. 

Even though you can deal directly with a lender and ask them any questions or concerns, you do miss out on the benefits that come with working with a loan officer. A mortgage broker or loan officer can provide you with different quotes from several lenders instead of only dealing with one lender. You may receive a better offer from a different lender with more favorable terms when working with a loan officer. 

What Does a Loan Originator Do?

As stated above, these originators walk you through the steps of getting the mortgage you deserve. They will ask you questions about your financial situation and goals, collect necessary documents, and verify your information. 

If you are in the market for purchasing a home, a loan originator will provide you with an estimate of your interest rate and home loan amount based on your assets, income, and credit score. This step is considered the mortgage pre-approval stage. 

Your mortgage loan originator will continue to work with you throughout the entire loan process, even through underwriting and closing, to ensure the home buying process goes as planned. 

Loan Officer Licensing Requirements

Before you partner with any loan officer, you will want to make sure they meet the minimum licensing requirements. Mortgages come in several loan types, such as FHA, VA, or conventional loans.

These mortgages have different conditions, documents, laws, and terms that each loan officer must know. The officer or lending institution you work with must have knowledge of all these requirements in the residential loan industry. 

Keep in mind that banks nationwide must have federal registrations. They do not require their officers to have their own loan originator licenses. 

For non-bank lenders, such as credit unions or private institutions, their mortgage loan originators much have their licenses within their state. An MLO can have their license in several different states even if they only work or reside in one specific state. 

Licensing requirements for MLOs:

  • 20 hours of pre-licensing education
  • A score of at least 75% on their SAFE mortgage exam
  • A thorough background check
  • Yearly mortgage continuing education 

You have every right to check if your loan officer has proper licensing. They should provide you with their information if you request it from them. 

Loan Origination Process

The loan origination process typically starts with a potential borrower submitting their application to their selected loan officer or lending institution. Once your application is received and you agree to a credit report pull, the lender will look at your application in its entirety. At this stage, they will look at your credit history, available assets, income, and why you want the loan. 

Underwriting Review

Once they have all that information available, they will plug the data into an automated underwriting software, or their on-staff underwriter will review the application. Underwriting will then let the loan officer know the exact loan limits you qualify for. 

Review Your Terms

The loan officer will then review the offer from underwriting and discuss your options with you. You will hear about your interest rates and potential loan terms.

Your officer will let you know if your loan is a fixed-rate or an adjustable-rate loan and if you qualify for a longer-term loan. Once you agree to the loan terms, you will move forward, originating the loan. 

Origination Fee

In your loan terms, you may notice something called an origination fee. This fee compensates the loan officer or the lending company for all their work when qualifying you for the loan.

When you apply for a mortgage, the application is free. When you decide to have a specific company or loan officer originate your loan, you pay this origination fee.

You do not pay this fee out of pocket. Instead, this fee is rolled into your mortgage. A typical origination fee for a home mortgage is around .5% to 1% of your overall loan amount. 

First-Time Buyers

If you are in the market to purchase a home for the first time, you may worry about which mortgage product works for you. There is no need to worry; that is what your loan officer is for. Even if you do not initially qualify for a conventional loan, there are other government loan products, such as an FHA, that you can qualify for. 

Originating an FHA or a USDA loan may require additional documentation. For example, if you apply for a USDA loan, there are financial thresholds you must not exceed. Once you submit this other documentation, your loan officer can start the underwriting process to see if you meet those requirements. 

Requirements for Loan Origination

Depending on the type of mortgage product you wish to apply for, you must provide different types of documentation. In general, there are a few documents that all mortgage products require to start the application process. 

Standard documents you need:

  • Credit report
  • Photo ID
  • Information on co-signers if needed
  • Tax returns
  • W2s and 1099s
  • Bank statements
  • Proof of assets and other expenses if applicable

As mentioned earlier, certain government loans require different information. For example, you most likely will not qualify for a VA loan unless you are a veteran, because you will not have the military affiliation information.

USDA loans are mainly for rural housing needs. If the home you wish to purchase is in the city or not within the USDA location requirements, you will not qualify for a USDA loan. 

Find the Best Mortgage Today!

Purchasing a home is more than just buying a new pair of pants or shoes. It is a huge financial decision that can impact you for years to come. It is easy to become overwhelmed with your mortgage financing options, but there is no need to worry.

Partnering with a reputable company ensures that you get the right mortgage loan product for your financial needs. If you are ready to see your options, contact us now!