When purchasing a new home or refinancing a current home, you will always encounter the same lineup of employees. To help you understand who will be part of the process of your home loan, here’s a breakdown of each person and the role they play.
Talking with Your Home Loan Lender
The process will always start with you having a conversation with the lender. With a healthy bank balance or savings account, you can expect this conversation to flow. However, there is no yes or no answer at this point and your lender will simply connect you with a loan officer in order to further your home loan application.
The Loan Officer
A loan officer is a representative of a bank, credit union, or other financial institution who assists borrowers in the application process. Loan officers are often called mortgage loan officers since that is the most complex and costly type of loan most consumers encounter.
A loan officer is a representative from a lending institution that will assist with your home loan application. These individuals deal with all types of loans but mostly home loans, for these are the most complex and costly to sort out. More specifically, a loan officer will provide you with options and products, and then advise in terms of the application process for “approval in principle” – a provisional type of approval. And this is where the underwriters come into play, but not before a loan processor has compiled all necessary documentation for your application.
The Loan Processor
The mortgage processor is tasked with preparing the documentation for your home loan application. With this in mind, a loan processor works between the underwriter and the loan officer. As for the documents, this not only refers to application forms but also any relevant documents which will be required by underwriters. For instance, a loan processor will source bank statements, bills and any other documents related to your income and expenditure. It’s also a very important job because the more accurate a loan processor can be with this information, the faster and more efficiently an underwriter can work toward a decision.
The Home Loan Underwriter
A home loan underwriter is responsible for either approving or rejecting your application. They must compile a risk report to make this decision and try to demonstrate how the report is in line with the guidelines of your lender.
As part of this process, an underwriter will obtain various credit reports and then assess the income, assets and debts associated with your profile. If there is any potential collateral that can be used against the loan, this is also taken into consideration. It’s possible for underwriters to then assess the risks associated with mortgage repayments and apply certain conditions to the home loan. Either way, the underwriter will then reject or approve your application and relay this information to your lender who will then get back in touch with you.
As you can see, there is much documentation to be sorted for your home loan application and these individuals hasten the process. There are also different options and products for individual circumstances and you need the assistance of a loan officer to choose the right one. That being said, it’s always best to know where you stand as soon as possible and the first step toward a home loan is simply talking with your lender.