Buying a home and applying for a home loan can be a very timeous process. That is why most people make use of mortgage originators, specialists who can assist you in applying for a loan and receiving finance from the banks.
What is a Mortgage Originator?
Investopedia defines a mortgage originator as; “an institution or individual that works with a borrower to complete a mortgage transaction.”
Simply put, mortgage originators are financial service providers who act as a middle man between a bank and homebuyer.
What Does a Mortgage Originator Do?
Originators take on a pro-consumer role and provide services including the following:
- Helping clients evaluate their financial situation.
- Advising clients on the best course to take to finance a home.
- Assisting clients in the finance application process.
- Providing clients with home loan options from various banks.
- Liaising and negotiating with the bank pon behalf of a client.
- Helping with all paperwork involved in the home loan process.
Mortgage Origination: How It Works
- A homebuyer signs an offer to purchase.
- Once signed, the homebuyer provides the estate agent with information regarding how the home will be financed.
- The estate agent will then pass on this information to a respective mortgage originator.
- The originator will then contact the client and provide advice on different home loan option from different banks (including home loan rate etc.)
- The client then chooses an option that suits their specific needs.
- The originator will then submit the relevant documentation to the respective bank.
- The originator will continue to follow up with the bank during the application process and keep the client up to date with any developments.
- The originator will confirm the client’s acceptance with the bank.
- Finally, the originator will inform the client of all legal requirements and follow up with the transfer and bond attorney.
Why You Should Use A Mortgage Originator
Every bank has their own lending criteria and requirements. Navigating all these different options can be a nightmare as an individual. However, when working with a reputable mortgage originator, this process is a lot more straightforward, and you are more likely to secure a home loan.
- An originator can give you a clear and objective overview of the loan options that are currently on the market – making the client aware of all their options.
- Originators will go through your finances and credit to ensure that you clear up any unresolved issues (such as debt) before applying for a home loan.
- Working with an originator will save you a lot of time. This is because they fill out all the various application forms on your behalf – collecting your information upfront.
- A mortgage originator can significantly increase your chance of receiving a home loan. Banks have automatic scoring processes that reject applications if they don’t match the preset requirements exactly. An originator will help you format and package your application so that it has a better chance of being approved.
- Because originators have strong relationships with all the major lenders, they are in the best position to negotiate lower interest rates on your behalf – potentially saving you thousands.
According to Senior Home Loans Consultant for Mortgagemax, Sharon Jacobs, some of the benefits of using a mortgage originator are that you only have to complete one application to be sent through to various banks; can shop around for the best interest rate and receive expert advice on what banks are looking for.
“ It’s a specialised field home loans, and as Mortgage Originators are home loan specialists, they also know how to compile a fully completed and structure applications in terms of what the banks look at to get the required outcome.”
Advice for First-Time Home Loan Applicants
Sharon also offers some advice to those individuals applying for their first home loans.
- Firstly they must have clear credit records.
- No unpaid debit orders or RD’s and if there are any, an applicant must provide a detailed explanation as to why they have occurred.
- Ensure that all their accounts are paid timeously as they will lose points if they pay erratically.
- They must be aware of Attorney’s fees and when they need to be paid.
- The interest rate needs to be explained to them, especially if a variable interest rate.
- They need a clear explanation of the Cover Clause in the bond documents as this is of vital importance.
- Penalty fees, if the bond is paid off earlier than prescribed by the banks and these time frames vary from bank to bank.
- If they sell the property down the line, it’s essential to give the bank notice thereof, as not to incur penalty fees. If they put their house on the market, they need to advise the bank. If the property is sold two months later, they will only be charged a month’s penalty instead of the full 90 days.
- Understand that transfer fees are based on the purchase price, whereas registration fees are based on the bond amount approved.
- Although a fixed debit order is in place, they can pay more into their bond should they have extra funds via internet banking.
- If the interest rates increase the variable debt order put in place will automatically adjust to deduct the new repayment, so no need to go into the bank.
Nothing Is Guaranteed
It is important to note, that while working with a mortgage originator does increase the likelihood of an approved loan, they can’t guarantee it. At the end of the day, the decision is still up to the respective lender, who will determine if the homebuyer can afford to purchase the property and repay the loan.
At AMC Hunter INC, we are dedicated to providing world-class property law services, and as such, we have a strong working relationship with most mortgage origination companies, including Ooba, Morgagemax and Better Bond. Contact us today for more info.