How to Become a Mortgage Loan Officer

How to Become a Mortgage Loan Officer

When homebuyers contact a bank or credit union for loan information, the first person they speak to is usually a mortgage loan officer. Unlike a mortgage broker, who is independent and can offer loan options from multiple financial institutions, a loan officer works for one company.

Mortgage loan officers, known as MLOs, act as liaisons between lenders and potential borrowers. They guide clients through the financing process, keep real estate agents informed and even follow up after closing to ensure borrowers are comfortable with their mortgages.

Education Requirements

Mortgage loan officers help consumers and small business owners with a variety of secured loans. Most often, they assist borrowers with mortgages to purchase or refinance homes and other real estate. Loan officers must be knowledgeable of all lending products, banking industry regulations and the documentation required to process a mortgage.

A bachelor’s degree in finance, business or a related field provides job candidates with an excellent background for becoming a mortgage loan officer. These degrees teach students the ins and outs of financial institutions, accounting principles, statistical analysis and evaluating information.

Many loan officers work on commission, meaning they earn a salary plus the additional income from each loan. While working on commissions is appealing, it can also be challenging to manage customer relationships.

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As a result, previous work in sales or customer service can be an asset for those interested in becoming mortgage loan officers. Managing professional relationships is especially important in this role, as it can help boost loan officers’ reputations and bring in new business.

Licensing Requirements

Mortgage loan originators (MLOs) must register with the National Mortgage Licensing System (NMLS). Each state may have additional licensing requirements. The NMLS also provides a resource guide that includes information on state-specific licensing requirements.

MLOs who work for depository institutions such as banks, savings and loans, credit unions or federally insured credit unions are required to obtain a license through the state in which they work. Those who work for a nondepository lender, such as a private company, do not require a license, but they should be registered with the NMLS.

Many mortgage loan officers also work as real estate agents, allowing them to leverage their knowledge of the home buying and financing process to streamline the overall experience for customers.

Dual-licensed professionals also serve as an invaluable source of referrals for new clients. Those interested in becoming an MLO should carefully review all licensing requirements and training options before starting the registration process. Then they can focus on what really matters — helping people become homeowners.

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Experience Requirements

Obtaining a job as a mortgage loan officer is not difficult, but it does require training and following specific prerequisites and rules. Those seeking to become licensed must receive education, register with the state and pass a national test called the SAFE MLO exam or its equivalent in the states that have adopted the uniform state content.

Mortgage loan officers often work at financial institutions like banks or credit unions and may also market themselves to real estate agents for referrals. Some are self-employed while others earn salaries that may include commission fees for closing loans.

Experienced mortgage loan officers have expert knowledge of the financing options offered by their employer and can often save homebuyers money because of their relationships with vendors, notes Boomer. However, a loan officer that works at one company may have fewer choices in terms of mortgage products than the bank down the street and may not offer the best rates or fees.

Job Duties

Mortgage loan officers perform a variety of duties to help homebuyers obtain their mortgages. This may include evaluating clients’ financial information to determine their eligibility for a mortgage loan and assisting with the completion of paperwork. Loan officers must also keep detailed client records and follow national, state and local mortgage loan rules and regulations.

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Mortgage loan officer responsibilities also involve conducting credit checks, overviews of borrowers’ debt-to-income ratio and other information to screen out potential applicants. They must also research and sort out the best mortgage lender options for each customer, including interest rates and terms.

A mortgage loan officer can also be the point of contact between the various people involved in a home purchase, such as the borrower, mortgage broker and settlement attorney. They can help to alleviate confusion about the many steps in the loan process, and can make sure that all parties meet their respective deadlines. They often work on both residential and commercial mortgages.