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General Mortgage FAQs
Question
What are the different types of mortgage professionals and what are the differences?
Answer
In regards to mortgage licensing in Texas, there are two types of licenses. The first is a Loan Officer License. The second is a Mortgage Broker License. Many times the loan officers at banks are not licensed because when they work for a bank, they don’t have to be licensed. Generally a Loan Officer can get a Mortgage Broker license after being in the mortgage business for 18 months and meeting educational and financial requirements. Someone usually does that if they intend to operate their own independent mortgage company. Most loan officers choose to work under a Mortgage Broker who is then responsible for many of the legal obligations, including government audits and such.
Within mortgage (broker) companies there are generally two types of positions – originators and processors. The originators are the sales guys who get the loans in the door and the processors are the ones who prepare the loan packages so that they can get them through underwriting. Some Mortgage Brokers, such as Chad, perform both functions so that the customer has a single point of contact from start to finish and to have maximum quality control.
Question
What are the different types of mortgage companies, how do they work, and what do they do?
Answer
Behind the scenes, there are Mortgage Bankers and Mortgage Brokers. Mortgage banking companies generally use their own money to finance their home loans where as mortgage broker companies almost always, by definition, “broker” their loans to a bank or wholesale lender. Both have their pros and cons. The difference with brokers is that they can get wholesale pricing from multiple banks and use that to the advantage of their customers.
Question
What separates good brokers from bad ones?
Answer
What’s good or bad is certainly a matter of opinion. We define a “good” broker as one who is knowledgeable about a wide array of mortgage programs, someone who listens to the customer’s needs, and who can and will deliver on what he or she promises. We define a “bad” broker as someone who does and says whatever is needed to get the sale, but who does not truly care about the customer’s needs and who is hard to get a hold of and is not accountable for promises made.
Question
What is the best place to get a loan (ie. bank, mortgage company, etc.)?
Answer
This question can certainly be debated, but industry research shows that customers are most satisfied when working with mortgage brokers. They say they like the flexibility mortgage brokers have and they appreciate the quality of service. We personally believe the difference comes down to the way brokers are compensated. We don’t get paid a dime until we successfully close your loan, and we don’t get referral business unless we do that to your complete satisfaction. When it comes to banks, most of the time the loan officers are salaried employees who might make a small commission on their sales, but they don’t have the same level of motivation to provide personal service and to earn your future business. The other important thing to consider is that brokers generally have access to many more programs to offer to their customers and their pricing is usually better as well because the banks want to encourage us brokers to continue to bring them business.
Question
What incentives do mortgage brokers have to approve or deny loans?
Answer
Mortgage brokers aren’t really in the position to deny loans, and they really have no incentive for that to happen. It is the underwriter who works for the lender who approves or denies a loan. It is the job of the mortgage broker to prepare the loan file in such as way that it has the most likelihood to be approved. Some mortgage brokers charge an application fee to buyers which is paid upfront, but most brokers, like ourselves, only get paid when the loan closes and funds. Therefore, it is almost always in our best interest to get our customers approved, assuming they qualify.
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