Take Initiative as It Yields Benefits

By skipashraful Updated October 28, 2023 Reviewed by skipashraful
Photo Credit: BiggerPockets

When you embark on the mortgage loan process, your initial point of contact will be your chosen loan officer. It’s worth emphasizing ‘chosen’ because you do have a say in the matter. If you find early on that you and your loan officer don’t quite see eye to eye, you have the option to pause the process and seek another professional you can collaborate with. In any case, expect a fair amount of communication, especially at the outset.

You’ll need to commence the documentation of your loan file, which involves items such as your paycheck stubs, W2s, or, if you are self-employed or derive over 25% of your monthly income from non-employer sources, your last couple of years’ federal income tax returns. Additionally, you’ll be asked for bank statements to demonstrate that you have sufficient funds to cover your closing costs, and more. You’ll also need to review, initial, and/or sign a variety of loan documents and disclosures. Once these tasks are completed, you can mostly step back and await further action from your loan officer.

However, it’s crucial not to disengage entirely and just wait for your loan officer to take the reins. While you can take a step back, it’s important to maintain contact with your loan officer during this initial phase. Your loan officer will collect your initial information and secure an initial preapproval. At this juncture, you may be requested to provide a few additional documents, but for the most part, your part is finished. Nonetheless, you can’t simply switch off and wait.

Your loan officer is handling multiple loan files simultaneously. Therefore, don’t anticipate that your loan officer will keep you updated at every step of the process – it’s not necessary. While it may seem relatively quiet from your end, your loan officer is diligently working on your loan file.

Let me provide an example to illustrate the importance of being proactive. Suppose you initially receive a quote of, let’s say, 6.00% for a 30-year loan. However, you hesitate to lock in this rate because you anticipate that rates will drop in the very near future – a somewhat common gamble.

During this ‘quiet period,’ rates start to rise gradually, perhaps by increments of 0.125%. In the next couple of weeks, rates climb to 7.00%. This may seem like unfavorable news, right? Nevertheless, keep in mind that during this period, your loan file isn’t the only one on your loan officer’s desk. It’s not realistic to expect your loan officer to reach out to you with each incremental rate change. Therefore, it’s advisable to take a proactive stance and directly contact your loan officer for rate updates and to discuss whether a rate lock is advisable.

The risk here is that you may no longer qualify for the loan when rates reach 7.00%. You will receive a rate lock information form that provides details about locking in a rate, so make sure to review it carefully. It’s one of the more crucial documents you’ll encounter.