Loan Officer and Real Estate Agent Relationship: Is It Important?

Every loan officer understands the power of building and nurturing relationships with key professional partners, but is a real estate agent relationship really important for a loan officer? Real estate agents can be one of the most beneficial relationships for both the loan officer and the real estate agent. The industry knowledge that can be shared between these two professions not only benefits their professional success but also create a powerful partnership for homebuyers who can take advantage of this shared knowledge. But the best loan officer and real estate relationship requires time and effort in order to maximize and truly benefit from the relationship.

Key Takeaways

• Understand the benefits of creating and nurturing a strong business partnership with a real estate agent.
• Learn about the many benefits a loan officer and real estate agent partnership offers your business.
• Discover key dos and don’ts when it comes to building a successful partnership.

Can loan officers and real estate agents work together?

Loan officers and real estate agents make a powerful team when it comes to all areas of the home buying process. When you have a strong relationship with a real estate agent, you have a partnership that opens many doors when it comes to networking, marketing, educating, and gathering new homebuyer leads for both you and the real estate agent. Working together allows you to expand your reach and increase your exposure.

Networking

When you partner with a real estate agent, you grow your potential network. At networking events, such as Chamber of Commerce meetings or charity events, you are able to network as a team. By adding in other professionals, such as attorneys or contractors, you create a strong network of professionals that can help boost potential referrals and expand your reach. As you build a network, you gain exposure in your local community as well.

Marketing

Taking advantage of co-marketing opportunities with your real estate partner offers benefits for both of you. Working together, you can create co-branded marketing materials, such as open house flyers, social media posts or ads, and email marketing campaigns that allow you to reach potential new clients and contacts. Going one step further, consider sponsoring events for each other, such as open houses or educational seminars.

Educating

The home-buying process can be confusing, especially for a first-time home buyer. Real estate agents and loan officers work constantly to educate potential buyers on the ins and outs of the home-buying process. A partnership with a real estate agent opens up the doors to additional educational opportunities you have to offer borrowers. In addition, as a loan officer, you have a wealth of information that can be shared with your real estate agent partner’s contacts. Hosting networking seminars or educational classes together allows you to reach more potential contacts.

Referrals

When you build and nurture a strong relationship with a real estate agent and you successfully close deals together on a regular basis, you are both more likely to send clients each other’s way, helping to build a strong referral network.

How to build real estate agent relationships

Here you can clearly see the benefits of building and nurturing a professional relationship with a real estate agent. But where do you begin? Here we look at some of the dos and don’ts when it comes to building a solid real estate agent partnership.

Do's

1. Connect with your community

Being a visible member of your community allows you to be out in front of potential clients and partners, such as real estate professionals. Attending conferences and loan closings, for example, gives you the opportunity to engage with real estate agents and start the relationship-building process.

2. Share industry knowledge

Real estate agents are looking to partner with loan officers that have a vast knowledge of the industry and stay up to date on current news and the latest trends. Sharing your knowledge with your real estate agent and their clients provides value to the agent.

3. Be honest

A strong and successful partnership relies on trust and honesty between both parties. When building a relationship, make sure that everything you offer is something you are able to follow through on. Do not make promises that you are unable to keep. You are working on building trust, so you need to show them that you are trustworthy and reliable.

4. Be proactive and responsive

Communication is key when building and nurturing a relationship with a real estate agent. Connecting with your real estate partner a few times a week, whether through email or a phone call, can go a long way.

5. Add value to the relationship

A successful partnership benefits both parties in every way. A key component of a successful relationship is the value that each party brings, so adding value should always be the main goal when it comes to professional relationships. This added value can be anything from developing co-marketing social media or traditional campaigns to offering a seminar for your realtor’s clients that covers lending options for first-time homebuyers. Adding value such as this shows your professional partner that working together is beneficial for their business as well as yours. Keep in mind that you also want to find partners that bring value to your business.

6. Show gratitude

Be sure to show gratitude to your real estate partner every time they help you land a new client or close a deal. A simple “thank you” really goes a long way in maintaining a successful partnership.

Don’ts

1. Be pushy

Building a quality partnership takes time. Your initial goal is to build trust and credibility. If you immediately start by asking for referrals, you are likely to push away any potential partnerships. It is important that you take the time to gradually build a relationship that benefits both parties.

2. Do not waste their time

Everyone’s time is valuable and that includes your potential real estate partners. When making initial contact, such as at an open house, be upfront about who you are and why you are trying to connect.

3. Don’t be a ‘know-it-all’

While sharing your industry knowledge with professional partners and their contacts is a key benefit of a partnership, you don’t want to come across as a know-it-all. Sharing your industry knowledge in informational and helpful ways, such as when asked or during a seminar, is beneficial, but if you are always jumping in with information and statistics, for example, you come across as arrogant. This appearance of arrogance can hurt potential partnerships.

4. Do not make promises you are unable to keep

The key to a successful partnership is following through on your obligations. If you say you will do something, be sure to follow through and actually do it. Letting obligations go or failing to stick with the promises you make are likely to hurt an existing partnership, if not end it completely.

Nurturing a relationship with real estate agents

Strong relationships do not develop overnight, and it will take time to build and nurture a successful loan officer and real estate agent partnership. Following these dos and don’ts and taking advantage of what a strong partnership offers both parties can ultimately lead to success for your business.

Good Vibe Squad helps you find qualified leads

At Good Vibe Squad, we understand the importance of qualified leads for a loan officer, as well as for a real estate agent. Our Unfair Advantage™ program filters potential leads based on their likelihood of loan qualification, meaning the leads you receive from us are ready to find their dream home and close a deal.

To learn how we can help boost lead generation for your business and your real estate agent partners, book a strategy call today.

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Mortgage Acronyms You Should Know

As a loan officer in the mortgage industry, acronyms are a part of your everyday conversation with coworkers and industry professionals. While it is unlikely that your leads, clients, and even real estate partners will understand all the mortgage lingo, this mortgage acronym cheat sheet is a wonderful resource for not only new loan officers but also for your partners and clients.

24 mortgage acronyms every mortgage professional should know

An acronym is defined as an abbreviation formed from the initial letters of words and often pronounced as a word itself. As a loan officer, you use these acronyms every day, however, you must keep in mind that not everyone understands what these acronyms stand for and really mean. When working with borrowers, especially first-time borrowers, it is important that you use the actual words or explain what a specific acronym means.

Here we offer a comprehensive list and explanation of common acronyms in the mortgage industry.

APR

APR stands for the annual percentage rate. The annual percentage rate is the amount of yearly interest charged on a mortgage loan.

ARM

ARM stands for an adjustable-rate mortgage. With an ARM, the initial interest rate is typically lower, but the interest rate can change multiple times throughout the loan term. These changes are based on market conditions and can increase or decrease.

CD

CD stands for closing disclosure. A closing disclosure provides the loan terms, projected monthly payments, and the closing fees necessary to complete a mortgage.

DTI

DTI stands for debt-to-income ratio. To determine the DTI, you must add together a borrower’s monthly debt, including mortgage payments, and divide that by a borrower’s gross monthly income.

ECOA

ECOA stands for the Equal Credit Opportunity Act. This is a federal law that prevents lenders from discriminating against borrowers based on race, color, religion, national origin, sex, marital status, age, or public assistance.

FHA

FHA stands for the Federal Housing Administration. This government agency backs specific mortgages provided through private lenders. FHA-insured loans offer protection to the lender should a borrower default on payments. This protection enables many lenders to offer mortgages to more potential home buyers.

FMV

FMV stands for fair market value. This number is the highest price that a buyer would be willing to pay and the lowest that a seller would be willing to accept on an individual property.

FRM

FRM stands for fixed rate mortgage. This type of mortgage loan has a fixed interest rate for the life of the loan. These loans are often for 15-to-30-year terms.

FICO

FICO stands for Fair Isaac Corporation, an analytics company that generates a three-digit number based on information gathered from a borrower’s credit report. This number helps an underwriter determine how likely a borrower is to repay a loan.

GFE

GFE stands for good faith estimate. This is a form provided by a lender to a borrower when they apply for a reverse mortgage. This form outlines the estimated costs and terms of the proposed reverse mortgage.

HELOC

HELOC stands for a home equity line of credit. This is a line of credit that is borrowed against the equity available in a borrower’s home. This loan allows the borrower to request funds as needed and repay those funds at a set repayment schedule.

HUD

HUD stands for the U.S. Department of Housing and Urban Development. The purpose of HUD is to provide housing and community development assistance and to ensure that everyone has access to fair and equal housing. In addition, HUD oversees the FHA and the Fair Housing Act.

IO

IO stands for an interest-only mortgage. This type of mortgage allows the borrowers to make interest-only mortgage payments for the first few years of the loan, often averaging 5 to 10 years. At the end of the term, the borrower can choose to pay off the loan balance, refinance the mortgage, or begin with loan payments that include an amount towards the principal.

LOX

A LOX, also known as an LOE, stand for letters of explanation. A loan officer or an underwriter may request a LOX from a borrower in order to gain additional information or better explain information that may not be clear to the lender.

LTV

LTV stands for loan to value. This represents the amount of an outstanding loan to the appraised value or sales price. The LTV is given as a percentage number.

MIP

MIP stands for mortgage insurance premium. This is the amount that a borrower pays each month for mortgage insurance. This payment is given to either a government agency, such as FHA, or to a private mortgage insurance company.

P&I

P&I refers to both the principal and interest when it comes to a mortgage payment. This is the portion of your monthly payment that goes toward the interest and principal of the mortgage.

PITI

PITI stands for principal, interest, taxes, and insurance. These components make up a monthly mortgage loan payment.

PMI

PMI stands for private mortgage insurance. This insurance is often required by a lender when a borrower is financing more than 80% of the home value. PMI payments are included in the escrow portion of monthly mortgage payments and this insurance protects the lender from loss should a borrower default on a mortgage loan.

POC

POC stands for costs paid outside of closing. These are fees that are paid outside of the closing, such as appraisal fees, fees for credit reports, etc.

RESPA

RESPA stands for the Real Estate Settlement Procedures Act. This is a consumer protection law requiring mortgage lenders to provide borrowers with advanced notice of closing costs through a Good Faith Estimate.

TILA

TILA stands for the Truth in Lending Act, also known as Regulation Z. This requires a lender to provide borrowers with a disclosure that estimates the total cost of a mortgage loan, including finance charges and the annual percentage rate within three days of the application. This allows borrowers to shop for the best financing option among different lenders.

VA

VA stands for the Department of Veteran’s Affairs. VA loans are specific mortgage loans offered to veterans and are guaranteed by the government. These loans often require little to no down payment.

VOE

VOE stands for the verification of employment. A loan officer or underwriter will request verification of employment to ensure a borrower is able to cover the cost of a down payment and monthly mortgage payments.

Understanding mortgage acronyms for success

Understanding what these acronyms stand for allows you to better educate and explain terminology to your leads, clients, and professional partners. While some of the acronyms are understood outside of the mortgage industry, others are likely to confuse borrowers and require explanation.

Good Vibe Squad Helps You Gather Qualified Leads

At Good Vibe Squad, we understand the terminology in the mortgage industry, but we know that all your leads may not. We also understand how important a qualified lead is to successful loan officers. Our Unfair Advantage™ program helps weed out leads that are unlikely to qualify for a mortgage, leaving you with leads that are actively looking for a home and likely to be approved for a mortgage. To learn more about how we can help boost your monthly leads, book a strategy call today.

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Can a Loan Officer Influence Underwriter?

Loan officers and underwriters are both essential to the mortgage industry and the home-buying process. But can a loan officer influence the underwriting process? While both roles are essential to the home buying process, an underwriter must maintain an unbiased opinion when it comes to evaluating the risk potential of a loan. For this reason, the interaction between a loan officer and an underwriter is limited to a simple transfer of the borrower’s facts and data. A loan officer may not attempt to influence the underwriter.

Key Takeaways

• Better understand the differences between a loan officer and an underwriter and, while they work together, the loan officer should not influence the decision of the underwriter.
• Understand the key steps in the underwriting process and how an underwriter makes a loan determination.
• As a loan officer, there are ways you can help ensure that the loan applications you submit have all the necessary information the underwriter needs to approve the mortgage loan.

Loan officer vs underwriter

A loan officer and an underwriter are two different positions that play crucial roles in the loan process. Here we take a closer look at each role and exactly what their part is in the home buying process.

What do loan officers do?

A loan officer is the one that works directly with a borrower, connecting them with a lending institution for their mortgage. Loan officers meet with prospective borrowers, take applications, gather all the necessary documentation needed for loan processing, and work with the borrowers to ensure they have everything necessary to obtain loan approval. A loan officer is also a source of education for potential borrowers, helping them understand the loan process and what they need for loan approval.

What do underwriters do?

Once a loan officer receives an application and gathers the necessary documents, everything is passed to the underwriter. The job of the underwriter is to review all documentation and determine the risk level associated with the borrower. Oftentimes the underwriter will contact the loan officer if they need additional information from the borrower to make their determination. When determining the potential risk, an underwriter will look at things such as credit scores, LTV ratios, DTI ratios, and the value and type of property being purchased. In addition, an underwriter works with the appraiser to determine the actual value of the property which will be the collateral for the loan.

Do loan officers and underwriters work together?

Loan officers and underwriters do work together but from a distance. A loan officer works directly with the borrowers and provides the necessary information to the underwriter, who then evaluates the information. A loan officer must not attempt to influence the decision of the underwriter. As far as interaction, a loan officer provides the information and can ask questions about an approval or denial and an underwriter can provide an explanation about their loan decision, as well as provide educational information about the loan guidelines and what is required for loan approval.

What is mortgage underwriting?

Mortgage underwriting is a part of the home loan process where an underwriter evaluates the risk of approving a borrower for a mortgage. During this process, the underwriter looks for stable work history, the borrower’s ability to manage credit and repay the loan, whether the property’s value supports the loan amount, and the current market conditions, such as a stable economy and job market.

The mortgage underwriting process

The underwriting process varies from lender to lender, however, there are five main components to the underwriting process. Keep in mind that underwriting can be a long process but having the necessary documents ready and included can help speed up the process.

1. Pre-approval

In most cases, a borrower will begin the underwriting process with a pre-approval. With pre-approval, a borrower provides financial information, such as income, debts, and credit history. The lender evaluates this information and provides pre-approval for the amount of financing they qualify for. Keep in mind that this is not a guarantee for a mortgage and additional steps will be necessary to obtain a mortgage.

2. Income and asset verification

Income and asset verification occurs both during the preapproval process and the underwriting process once the borrower makes an offer on the home. When evaluating this information, the underwriter looks at documents such as tax returns, bank statements, investment accounts, employment history, and much more.

3. Appraisal

Once the borrower finds a home within their budget and makes an offer to the seller, the underwriter will conduct a property appraisal. The appraisal looks at the property condition and comparable homes in the area to determine whether the amount offered to the seller is appropriate. If the home is valued well under the sales price, the lender is unlikely to approve the mortgage.

4. Title search and insurance

A title company performs a title search on the property in order to ensure that there are no legal claims against the property by another person or lender. This can include liens, mortgages, easement rights, zoning ordinances, unpaid taxes, and more. Once the title company determines that the property is free from legal claims, a title insurance policy is issued in order to protect the lender.

5. Making a lending decision

Once all the information is gathered on the property and the borrower, the underwriter thoroughly reviews all the information to determine whether or not to approve the application for a mortgage. At this stage, the underwriter will approve, deny, or request additional information that is necessary to make a decision.

How loan officers can help aid the underwriting process

While a loan officer cannot influence an underwriter in any way during the underwriting process, there are some things a loan officer can do to help aid the underwriting process.

Writing cover letters

When submitting a loan application to the underwriter, you want to make sure that all the information you provide them is clear and easy to understand. Include a simple cover letter that summarizes the information included, explains anything that may appear unusual, or explain a borrower’s story. This will help provide information to the underwriter upfront and saves multiple questions that may require answers throughout the process.

Staying up-to-date on guidelines

As a loan officer, you must stay up to date on loan guidelines, such as document expiration dates. Gathering the necessary documents is essential for the underwriting process and it is important that, as a loan officer, you are submitting documents that meet specific guidelines. If submitted documents do not meet these guidelines, the underwriter will need to request additional information, prolonging the underwriting process.

Providing accurate information

Before submitting an application to the underwriters, loan officers must ensure they have the most accurate and complete information on the borrower. For example, if a borrower has listed additional income from self-employment, real estate income, child support, or alimony, you will need to include additional documentation when submitting a loan. Taking the time to gather and provide this information from the start helps expedite the underwriting process.

Loan officers and underwriters working together

While loan officers and underwriters each play an independent role in the home buying process, they must also work together to ensure that the necessary documentation is gathered to allow the underwriting process to move forward. A good underwriter will work to educate the loan officers on the documentation that is necessary for each possible scenario and, to expedite the process, the loan officer works to ensure this necessary documentation is gathered.

Good Vibe Squad Can Help You Find Qualified Buyers

At Good Vibe Squad, we understand how important leads are for a loan officer. But we also understand that not every lead is created equal. Our Unfair Advantage™ system implements filtration steps to weed out low-quality leads that won’t pass loan approval. Instead, our system delivers leads that are ready to purchase a home and very likely to qualify for a home mortgage. To learn more about how we can help boost your lead generation, book a strategy call today.

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