Mortgage loan officer, Regions Bank in San Antonio
2020 president, Texas Mortgage Bankers San Antonio
Residential mortgage loan originator, Rocket Mortgage
Associate broker, eXp Realty in Dallas
Author/educator, Alliance Academy
This is part of a series of interviews with other professionals who participate in the real estate transaction.
How do you normally interact with real estate agents?
Warren: As a loan officer, I usually get referrals from REALTORS® to contact their potential buyers. And I then stay in communication with them throughout the qualification process and getting the loan approved.
Cahill: Ideally, the best time to have the mortgage and the real estate people interacting is before the buyers go out shopping for houses. Having that preapproval letter in hand before they go out shopping means they don’t fall in love with a house that they’re not going to have an opportunity to win on.
What are some of the most common topics that you deal with?
Warren: My job is to provide clients with an understanding of what their options are when applying for a loan, because it is not one size fits all by any means. I get their story from them in the initial prequalification process. After having pulled a credit report, I can pretty well determine which kind of bucket they’ll fall into as far as what they can qualify for. And then we discuss the various options within the range that they’re in. Then it’s a matter of them choosing what fits their personal goals.
Cahill: Dealing with borrowers who have credit issues and income instability is probably the most frequent issue that comes up. Self-employed borrowers have the hardest time, and after COVID, the underwriting guidelines require more documentation.
Another common topic would be proof of funds. I talked with a borrower who was ready to make an offer on a house; she needed a preapproval letter. As we were talking, she informed me that her assets were in her closet in the safe, not in the bank. We call that “mattress money,” and unfortunately, mattress money is not used for qualifying. It has to be in the bank and “seasoned” for at least two months.
What do you wish real estate agents knew about your business?
Warren: I wish agents were more aware of mortgage guidelines. If they were, they would recognize possible roadblocks or obstacles during their initial client meetings and get their clients in front of a loan officer as soon as possible. If agents skip those discussions about resources and expectations, or don’t know the guidelines, they might be wasting clients’ time showing them homes for which they cannot secure funding.
Cahill: I wish agents could help communicate to their clients about the importance of deadlines and that small delays can add up. Often, buyers don’t know how important it is to submit the requested documentation promptly. There are so many transactions going through each lender right now, so if the buyer isn’t ready, the lender will move on to the next transaction that is ready. A delay of a day here or there can delay the closing.
I also wish that agents understood the loan process and loan types a little better. Real estate agents don’t need to know everything about the loan process, but understanding some basics could save them time and make sure they are working with clients who are able to purchase a home.
What are the most common misperceptions about your role in the real estate transaction?
Warren: Some agents think loan officers have latitude as far as what fees are being charged or what interest rate or discount points are being charged. We honestly don’t have that anymore. Also, we do not have control over appraisals. They are dependent on market data.
Cahill: A common misperception is that agents and loan officers aren’t on the same team. An agent may say, oh, your loan officer is going to take care of that. We’re working for the same client and mutually working together. You want to have a good partnership and good communication. Set up a high-trust relationship where the loan officer feels comfortable communicating with you when things are going wrong. It can be a challenge when buyers pick a lender you don’t know or a large lender with a customer service department. But learning how to keep communications flowing in those situations will benefit your clients.
What questions should real estate agents and their clients ask lenders?
Warren: REALTORS® should ask about the processes for a particular lender. Do you underwrite the file as soon as it’s turned into processing, or do you wait until everything is in before you send it to underwriting? Do you offer a preapproval without a property address? Get to know what programs are being offered by lenders.
What are the most important criteria when choosing a mortgage broker?
Cahill: I would say experience, especially if you’re working with borrowers who have complicated backgrounds. You need somebody who really knows how to navigate the system. Also, having multiple types of products is helpful. And the lenders you work with should know what they are good at and what they’re not good at and can make strong referrals when they can’t help your buyers.
Remember: You cannot pay mortgage professionals fees or other valuable consideration for referrals or for being included on a list of preferred agents. You also cannot accept fees or valuable consideration from mortgage professionals for referrals or inclusion on such lists. Read the full rules pertaining to settlement service providers in RESPA Section 8(a) and TREC Rule Section 535.148.
For more information on the difference between prequalification and preapproval, visit texasrealestate.com and search preapproved.