How to Become a Loan Originator: A Step-by-Step Guide

Becoming a loan originator is a great career path for anyone looking to get into the mortgage and lending industry. Loan originators, also known as mortgage loan officers, help consumers through the mortgage application and approval process. They work directly with borrowers to understand their financial situation and goals, advise them on loan options, gather documentation, and manage the loan until closing.

If you’re interested in becoming a loan originator, this step-by-step guide will walk you through everything you need to know.

Step 1: Meet the Basic Requirements

To become a licensed loan originator. you must

• Be at least 18 years old
• Have a high school diploma or equivalent
• Pass a background check
• Have no felony convictions in the last 7 years

Step 2: Get Your NMLS Number

All loan originators must register with the Nationwide Mortgage Licensing System (NMLS) This provides you with a unique identifier that will stay with you throughout your career,

To get your NMLS number:

• Go to the NMLS website and click on “Create an Account”
• Provide your personal and contact information
• Read and accept the terms and conditions
• Pay the $30 application fee
• Request your NMLS number

You should receive your NMLS number within 48 hours. Keep this number handy as you’ll need it for all your licensing requirements

Step 3: Complete 20 Hours of Pre-Licensing Education

One of the key requirements to becoming a loan originator is completing 20 hours of NMLS-approved pre-licensing education courses.

These courses cover important topics like ethics, lending standards, and regulations. They ensure loan originators have a solid understanding of the industry before starting their careers.

Most states require you to complete:

• 3 hours of federal law and regulations
• 3 hours of ethics
• 2 hours of non-traditional mortgage lending
• 12 hours of undefined electives

You can take these courses online, in a classroom, or through a combination of both. Just make sure the courses are NMLS approved.

Step 4: Pass the National SAFE Mortgage Loan Originator Test

After completing your education requirements, the next step is to pass the National SAFE Mortgage Loan Originator Test. This test was implemented as part of the SAFE Act to ensure proper knowledge across the industry.

Here’s what you need to know about the test:

• It consists of 125 multiple choice questions
• You need a score of at least 75% to pass
• Time limit is 190 minutes
• Registration fee is $110

Be sure to study using NMLS-approved materials and practice tests. You can schedule the exam through a local testing center. If you fail, you must wait at least 30 days before retaking.

Step 5: Apply for Your State License

Passing the national SAFE test is a crucial step, but you still need to meet your state’s specific requirements to get your loan originator license.

This includes:

• Completing any state-required education
• Submitting license forms and fees
• Undergoing background checks
• Getting fingerprinted

The application process and costs vary by state so be sure to check your state’s requirements. Some states may also require sponsorship by a licensed mortgage company before they approve your application.

Step 6: Maintain Your License

Getting your loan originator license is just the first step. You must take continuing education annually to maintain it.

• Complete at least 8 hours of NMLS approved courses each year
• Take 2 hours of ethics training as part of the 8 hours
• Report your continuing ed hours to the NMLS

You’ll also need to renew your license through your state regulator. This involves paying renewal fees and reauthorizing your record in the NMLS.

Finding a Job as a Licensed Loan Originator

Once you have your loan originator license, you can start applying for mortgage lender and broker jobs. Look for openings at banks, credit unions, and independent mortgage companies.

Many loan originators choose to go independent as well. If you want to work independently, you’ll need to meet your state’s requirements for opening your own mortgage origination company.

With dedication and hard work, you can build a rewarding career helping homebuyers get financing. Following this guide will put you on the path to becoming a successful licensed loan originator. Just take it step-by-step and before you know it, you’ll have your license in hand.