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Here’s Why Your Loan Officer Should Ask You Questions About Your Financial Goals


Buying a home is an important and exciting financial step. It’s one piece of the puzzle that is your financial future—so before you jump into a home mortgage, you should carefully consider how the loan fits into your overall financial goals.

Loan officers can help navigate this tricky subject with you, especially if you’re a first-time home buyer. They should ask a variety of questions about your financial goals so they have a firm understanding of what your next 5-10 years—and beyond—look like.

Here are the reasons your loan officer should ask you questions about your financial goals:

1. You should only borrow what you can afford.

This point may seem obvious, but it bears repeating: You should never overextend yourself with a mortgage that you can’t truly afford. Your loan officer should take the time to fully understand your income and debts and your plans for the future. When helping you identify a target monthly payment, your officer should consider your current financial situation as well as how it might change in the coming years—for example, if you plan on having children, changing jobs, going back to school, or making other significant life decisions.

2. Your credit score is a big factor in your interest rate.

Your three-digit credit score determines what interest rate you can secure. The higher your score, the lower your rate. With a lower interest rate, your monthly mortgage payments will be lower and you’ll pay less in interest over the life of the loan.

These factors can have a big impact on your overall finances, so your loan officer should be asking questions about your current credit score and what may be influencing it (such as credit card debt and student loans). You may be able to bring your credit score up a bit my taking care of some of these factors before closing on your loan, which may help save money in the long run.

3. The loan term helps determine your monthly payment amount.

Another big factor to share with your loan officer is how long you expect to be paying on the loan. Shorter loan terms, such as 15 years, generally come with lower interest rates but require higher monthly payments. Longer terms, such as 30 years, have slightly higher interest rates but lower monthly payments. Talk to your loan officer about your financial goals in the next 10 or more years, because that will help identify which loan term would work best for you.

4. Your first home can set you up for a lifetime of financial success.

Your loan officer can help you ensure your first home is a strong investment that you can truly afford and will benefit you for decades to come. That said, your loan officer must understand your financial standing and goals so that you end up with a mortgage payment you can handle, both now and in the coming years.

Paying your mortgage faithfully is extremely important for your financial future. A bankruptcy or foreclosure can hurt you for years afterward. For example, if your house is foreclosed on, you’ll have to wait another three years to borrow again through an FHA loan and two years for a VA loan. That’s why it’s always important to keep your financial goals in mind when buying a home; don’t overextend yourself, because you never know what the future may bring.

Although buying your first home can be a bit scary, partnering with a knowledgeable and helpful loan officer can ensure that you navigate the process with ease. And by asking you questions about your financial future, your loan officer can help ensure that your first home empowers—rather than endangers—your financial goals.