Real Estate myth #2: The loan officer is your agent.

Here's a real estate 101 question for you:  Who does the loan officer work for?

Here's a hint:  it's not you.

Loan officers work for the bank.  Now I know that is kind of obvious, but the real point here is how that fact affects you.  Loan officers have a fiduciary responsiblity to the bank.  Their goal is to maximize the profits of the bank to the best of their ability.  The basic law of supply and demand kicks in here.  They try to borrow money at the lowest rates and lend money at the highest rates possible.  They negotiate their rates of interest on what they borrow.  You should do the same.

When it comes to obtaining a loan, shop around.  You can use the bank that you have always used, the one that mom and dad use, the one that has the prettiest building or advertising....but how do you know that their rates and terms are the best you can get?  The answer is by taking your potential business to at least three of them.  Compare apples to apples and see who gets you the best deal.  The really cool thing?  That comparison shopping is about to get even easier.

Beginning in 2010, all lenders will be required by federal law to use a standardized Good Faith Estimate form.  This form will outline the estimates for interest rates, origination charges, escrow information, settlement charges, and more.  The new GFE will tell you what charges can not change and what charges can change and by how much.  Some lenders are already using this form.

Most of the loan officers I know are upstanding, honest, and friendly.  You could trust them with your children, your house keys, and your money.  This is not a slam on any of them.  You just need to know that the loan officer is not there to represent you or to be your agent.  Only you can shop loans to find the best deal for you.  Don't rely on regulation to guard against ignorance.  Educate yourself and be prepared.