Perhaps you can remember closing on your first piece of property. You may have felt excited, or maybe nervous. Something that most people cannot avoid feeling at the closing table is wondering whether or not they got a good deal on their loan. Let’s face it. Loans are very complicated, and you cannot possibly know everything there is to know about loans by your first, second, or even your tenth closing.

I personally fought these same feelings on many loans until I decided to become a loan professional and discover the real scoop about the lending industry. I was in for a treat, because I had no idea that I had so much to learn. Today, after having participated in hundreds of transactions, I share those findings with you. You will find, as I did, that not everything is as it seems.

Let’s begin with the loan officer. Rate conscious consumers always assume a good loan officer is one that provides the best rates while a bad mortgage office offers higher rates. Unfortunately, most consumers don’t know that loans are so complicated that one loan officer may have an interest rate of 6% and an APR of 8.25%, while another loan officer has an interest rate of 7.5%, but an APR of 8%. Which loan officer offered a better loan? The 6% or the 7.5% interest rate? The higher rate in this situation is the better loan.

When you contract to work with a loan officer on a transaction, you may be intrigued to learn that while there is much that a loan officer can control, there is also a lot that they cannot. Choosing the right bank with the right program and the proper deal package is about all a loan officer can affect. Now, while these are important details that can make or break a transaction, what I was not prepared for was how little control a loan officer has over the loan process, and even, the loan rate.

After a loan officer has collected your financial documents, the appraisal, and the title report, the loan is submitted to the bank. A loan officer will normally determine which bank to submiat to based upon which bank has the most competitive rate. But the following is what a loan officer cannot control:

1. A bank may pre-qualify you for a loan, knowing that you may only have a small chance of qualifying. Even though you have a deadline to produce a loan, a bank may waste the majority of that time going through underwriting and getting conditions before leveling with you. This means that you may lose the deal, and risk appraisal and earnest money costs.

2. Banks don’t play fair. They may ask you to produce a rental agreement for the home you are trying to purchase. Since you cannot market the home before purchasing it, this is an unreasonable request. Perhaps your appraisal came in showing too much equity. The lender may ask you to have the seller of the home write up a letter stating why they are selling so far below the appraisal price. The only problem here is that the appraisal is a private document and should not be shared with the seller. These are a just a few examples of what we encounter daily in the loan process.

3. Banks can change the rate after it goes through underwriting up to 24 hours prior to closing. The loan officer has no influence in this matter, and must simply deliver the bad news just prior to, or at the closing table.

As you can imagine, all of this creates quite a predicament for a loan officer.

It was during my early days of struggling with the loan process and facing a lot of frustration that I developed my definition for a real estate investor. An investor is someone who knows how to get things done that others cannot. This may seem like a strange definition, especially when it has nothing to do with real estate. However, this definition has everything to do with becoming a successful real estate investor, and also, a member of the elite 5% of all Americans that own more than 55% of our nation’s wealth (Edward Wolff).

REIC and its partner Strategic Lending have transacted several hundred loans and have formed the most efficient and reliable system for not only your typical loan needs, but for the financial investor as well. As you team with REIC, we encourage you to be involved, and work with us as we try to perform a little miracle on every one of your transactions and help you to achieve financial independence through real estate.

Real Estate Investors Club

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