In order to make an informed decision when it comes to your homebuying team, you’ll want to intimately understand which piece of the puzzle is held by each party. While you may be familiar with the role a real estate agent plays, the job of a loan originator may be more of a question mark. Read on for the role your loan originator will play in your journey to homeownership, as well as what you can expect while working with them.
What is a Loan Originator?
The term loan or mortgage originator refers to “an institution or individual that works with a borrower to complete a home loan transaction” (Investopedia, 2020). In other words, your loan originator, along with the help of an underwriter and loan processor, will manage the financial aspects of your home purchase. A loan originator may work for a banking institution, offering only that bank’s products, or work to connect you with diverse mortgage banking institutions.
What does a loan originator do?
Your loan originator will ultimately guide you through the purchasing and closing processes (Bankrate, 2021). They may collect your credit score and other necessary documentation, provide applicable loan options, answer financing questions and negotiate on your behalf. The loan originator does not approve or deny your application or determine how much financing you receive, but will instead submit your application for underwriting. The underwriting department will then assess your risk and determine your loan amount.
What does working with a loan originator look like?
Like any member of your homebuying team, your loan originator is there to make your experience smooth and streamlined. The right loan originator will possess relevant experience, provide support in stressful situations and communicate effectively. They might also save you money. According to a 2018 Freddie Mac study, nearly half of all homebuyers forgo shopping for better rates (Freddie Mac, 2018). A good loan originator can help connect you with the right loan and ensure you’re not leaving money on the table.
Your Loan Originator is an important piece of your homeownership puzzle. A home will likely be the biggest investment of your life, so you’ll want to make sure you have the right people on your team. Just like your real estate agent, aim to find a good fit when it comes to your loan originator for a streamlined and enjoyable home financing experience.
Published on May 31, 2021
