Choosing the wrong mortgage company can hurt you when buying a home in Kansas City - Here is my Top 8 List when choosing a loan officer in Kansas City

Choosing the wrong mortgage company can hurt you when buying a home in Kansas City 


Loan officers and mortgage companies are all the same. The have the same products and all of their real work is done on a computer. So why not choose a loan officer or mortgage bank by what their interest rate it is, right?


I wish more Kansas City home buyers used more skill in choosing their loan officer or mortgage company.


At the beginning of the year, I had a buyer back out of one of my sellers properties. The buyer was pre-approved, had done their inspections and had their belongings on the moving truck. Matter a fact, it had traveled over 1500 miles before the buyer found out that the loan officer had  left the mortgage business. Not only had the mortgage company left the business, he had over 45 incomplete mortgage files on his desk. That is right! 45 home buyers were getting ready to close on their homes and the loan officer left and quit the business with totally incomplete files. 


When the story came out the loan officer was actually losing money on the mortgage loans and felt that just leaving was a better way of handling business. An ethical loan officer would not have dragged a buyer along for 3 months then abandoned his buyers.


During the mid year, I had a buyer get denied on a mortgage the day of closing. I had no relationship with the loan officer because the buyer chose the loan officer and mortgage company. 


I was rather confused because the buyer was putting over 20% down on the home and had great credit scores. Matter a fact they were in the 790's. 


After a little investigating, the loan officer figured the ratios wrong. The new ratios did not fit into the program guidelines. This was something the loan officer should have know at the beginning.   


A couple months ago I found out that a loan officer was having problems pulling a buyers credit report on their remote site. He must have pulled their credit over 20 times from what the manager told the buyers. The extra inquiries dropped the buyers credit and kept them from getting their dream home.


This month, I found out that a loan officer sent the wrong file to an underwriter for a manual review. Although the file was not denied, the mistake delayed closing. Buyers were upset because it created chaos. Their whole moving plans changed.


The interest rate is important when choosing a loan officer, but service, knowledge and experience need to be high up on the equation when choosing a loan officer.


Here is my Top 8 List when choosing a loan officer in Kansas City:


1. Begin with referrals from friends, family and real estate agents. Referrals are a good starting point but must only be one factor in your decision making process. 

2. Understand the loan products being offered. This may be the most critical and most complicated tip of all. Mortgage products vary widely and the so-called "exotic" mortgages are some of the most complicated of all. 

3. Take the emotion out of the process. This is harder that it sounds. Buying a house is emotional. Know what you can afford. Your mortgage loan officer will only receive a commission by closing your loan. Their motivation is to get you into a product which you will qualify for not which you can afford. Ideally, this product is one which will lead you refinancing a short time later thereby ensuring more fees and commissions in their pocket. 

4. Avoid the lenders that run commercials ALWAYS indicating interest rates are at all time lows and you should refinance now. They have ways to drive up back end points. They are also notorious for pulling bad news the last minute. 

5. Beware of the mortgage industry version of the bait and switch. This involves a low initial rate or low costs but as closing draws closers these mysteriously increase because your lock has expired or credit score has decreased or some other excuse. I have seen it happen to borrowers with 800 credit scores. These mortgage companies figure you will close then refinance after closing.

6. Prepayment penalties - know what these are, how they work and what they mean to your ability to reduce your loan or sell your home. Hard prepayment versus soft prepayment. Most mortgage loans do not have a pre-payment penalty.

7. Know your own financial situation. Do you have credit blemishes? If so, lenders promising those blemishes will not impact your deal should be able to explain exactly why. Don't be embarrassed to ask about the details. Failing to understand the details enables the bait and switch tactics to succeed. 

8. Be prepared. Compile income, asset and employment documentation prior to beginning the loan process. Do you have two years employment to verify? Are you self employed? Go to the first appointment with all supporting docs. This will keep surprises from cropping up.

The good ones are out there, take your time and find them.


RE/MAX sells more homes than any other real estate company.
For a reason...should we talk?

Blog post written by the Dowell Taggart Team of RE/MAX Premier Realty 

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