The Myth’s of Getting A Loan

Feb 20, 2008 - 10:53 AM PST

In my opinion, finding a good loan officer is the key to having a good experience when buying a home. Here are the myths and realities of looking for a good loan and a professional to help you.


Myth #1 You should pick the loan officer with the best rate.
Reality* Although there is a certain amount of shopping you will need to do, if someone is offering a rate no one can match this may be a sign to watch out. There are loan officers that will tell you what you want to hear up front and at the 11th hour, when you’re emotionally and financially committed to the transaction, they will give you an excuse on why you have to pay a higher rate. And guess what, it’s never their fault. What can you do to help protect yourself? If you decide to work with them let them know you will be loyal as long as they keep their word. Verify that you can lock in that rate that day and study the fees as well.

Myth #2 Zero points mean I’m not paying for the loan.
Reality* Zero points means no out of pocket cost. However the lender gives you a higher rate because the lender still has to pay the loan officer and cover fees. If cash is a challenge for you, zero points might be the way to go. But remember, you’re still paying the increased monthly fees.

Myth #3 If I go to the bank I will get a better deal.
Reality* Loan brokers/officers are generally the best way to go. They shop for the best loans and rates. They not only look at the loans that the banks offer but they look at other lenders as well. If you go to the bank first they will try to sell you on their products first, which may not be best for you. I also find that loan brokers/officers are more eager to please because they often have to earn their business versus having the luxury of being set up right in the bank. Plus, they only get paid when the loan gets funded, so it’s in their best interest to get the job done.

I want to give you one last piece of advice. Look for an experienced loan officer or loan broker with a license. Believe it or not, there are people who do loans with no license. Having an experienced person working on the loan is important because a multitude of challenges will come up and you want someone with the experience to anticipate problems. You would be very surprised to see what types of conditions need to be met in order to get the loan closed on time, if at all. And sometimes these conditions can spring up in the middle or the end of an escrow. A good, experienced loan officer will look into your situation and will find loan programs based on your individual needs.

Discuss this article on our forums