Applying for a mortgage loan can be time-consuming or simply too demanding for the average person. The need for someone or an organization to assist you with the mortgage loan process then arises. Mortgage Originators are in higher demand in South Africa than ever before, with both businesses and individuals opting to use the services of a mortgage originator. Before we delve deeper into the topic, let us define a mortgage originator.
What is a Mortgage Originator?
A mortgage originator is a company or person who works with borrowers to complete a home loan transaction. Mortgage Originators work with home loan applicants from the beginning (application) to the end (closing).
A mortgage originator can be a broker, a bank, or a financial institution that specializes in home loan lending. In South Africa, examples of mortgage originators include, but are not limited to:
- City Property Finance,
- Absa Home Loan Finance,
- Nedbank Home Loan Finance,
- Ooba,
- Betterbond,
- Multinet Home Loans,
- Standard Bank Home Loan Finance, and
- Finbond
Mortgage brokers or banks collaborate with underwriters to ensure that loans are made to deserving customers. Additionally, loan processors are employed from the application date to the closing date to provide guidance through the approval process.
Characteristics
- A mortgage originator can be an institution or an individual.
- They can be brokers or lenders such as banks or lending financial institutions.
- They work closely with the borrower to complete a mortgage transaction that will result in a mortgage loan.
- A Mortgage Originator works with an underwriter to complete a home loan transaction for a borrower.
How It Works
Mortgage Originators take a variety of approaches when dealing with customers in order to get them the best deal possible. A mortgage originator guides borrowers through the home loan application process until the loan is closed; as such, they must adhere to a specific system that will lead them to the desired results.
The mortgage origination process consists of several basic steps, which include.
Step 1: Gathering of necessary documents
A mortgage originator’s first step is to gather the necessary information from the borrower. Any information related to the borrower’s desire to purchase real estate is considered necessary information.
Documents that the mortgage originator gather include:
- The signed application form signed by the borrower.
- A signed offer to purchase.
- ID copy.
- Proof of current residence.
- Proof of income that includes a bank statement, payslip, tax returns, or financial statements for a company.
- Monthly expenditure layout.
A loan officer will usually assist a borrower in gathering these documents so that they can be submitted on time to move on to the next step. The bond originator will gather the documents and information to aid in the application to borrow money to purchase the desired real estate.
Step 2: Processing of Information
To ensure that the information provided is compliant with the underwriting process, a mortgage originator must process it. Using an in-house loan processor, the bank or broker will ensure accurate packaging of the loan by verifying the documentation handed to them by the borrower.
The loan processor makes certain that the documents are complete and meet the lending criteria. A borrower will be notified of any documents that are missing or an application is incomplete, ensuring that everything is up to date.
Step 3: Underwriting Process
The underwriting process will include a number of tasks in addition to the application and paperwork submitted by the applicant. It will determine the risk that is assumed by issuing the mortgage loan to the borrower, as well as the property being purchased.
Property verification, appraisal, title search, surveying, and flood certification are all part of the property underwriting process. The underwriting process varies depending on the mortgage originator, but each mortgage originator will have its own set of guidelines that determine the risk that will be incurred by issuing a mortgage loan to a borrower.
Step 4: Funding
If a borrower uses a bank or another type of lender as their bond originator, the lender sends the borrower final loan documents for review and signature. The lender will release the funds for the real estate purchase, and the bond will be recorded and made official.
A broker would use multiple financial service providers to apply for a loan. Based on the information provided by the client, they would select the best lenders. The issuance of a home loan will be accepted based on the best available rates. Before funds are disbursed, the borrower will be notified of the outcome of their loan application.
Advantages of A Mortgage Originator
- Borrowers have less paperwork to deal with aside from sending required documents and signing documents sent by the bond originator.
- Brokers deal with banks and other lending institutions, so the borrower is not required to enter into any agreements with financial institutions.
- Borrowers can obtain lower interest rates on home loans by working with a mortgage originator. It is now possible to compare costs from various lenders.
- Borrowers receive assistance from experienced advisors, allowing them to make the best decisions when applying for a home loan.
- Mortgage originators do not charge the borrower anything; instead, they are compensated by the bank through commissions.
Disadvantages of A Mortgage Originator
- Estimates are not final offers provided by the mortgage originator and are subject to change when the final offer is presented.
- Because brokers have less control over the loan process, in-house bank loan offerings may provide a much faster way to access a home loan because they have most of the borrower’s relevant information.
Conclusion
When purchasing a home on credit, a Mortgage Originator is a useful tool to consider. A mortgage originator’s services are extremely beneficial and can lead to customers saving money and obtaining the best terms for their home loans. It is recommended that you use a mortgage originator if you are a first-time homebuyer to avoid making amateur mistakes when purchasing a property.
