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

Have you ever considered a career as a loan originator? This fast-growing field offers the chance to help homebuyers achieve the dream of homeownership while earning a great living

As a loan originator, also known as a mortgage loan officer or MLO, you’ll guide borrowers through the mortgage application process Your job is to understand their needs, present loan options, collect documentation, and secure financing on their behalf

If you’re a people person who enjoys educating and advising clients, this could be the perfect role for you. Read on to learn what it takes to break into this rewarding career and start originating loans.

What is a Loan Originator?

Loan originators are licensed finance professionals who work directly with borrowers to help them obtain home loans. As a loan officer, you will:

• Meet with clients to understand their financial situation and goals
• Present various mortgage products and programs
• Collect documentation such as tax returns, bank statements, and pay stubs
• Initiate loan applications and shepherd clients through underwriting
• Provide status updates throughout the lending process
• Ensure borrowers understand loan terms, disclosures, and closing documents
• Develop trusted advisor relationships that lead to referrals

In essence, loan originators are guides who steer homebuyers through the complex mortgage process. You’ll answer questions, troubleshoot issues, and ensure clients secure optimal financing.

Key Skills for Loan Originators

To succeed as a loan officer, certain skills and traits are invaluable:

• Communication abilities: You’ll need to present complex information in a simple, understandable way and handle sensitive financial conversations with tact.

• Organizational talent: Juggling multiple client cases while meeting rigid compliance demands requires stellar organizational skills.

• Problem-solving: When client applications hit snags, you must quickly develop solutions. Creative thinking is a must.

• Passion for helping: At your core, you should want to provide an amazing experience that gets buyers into their dream home.

• Work ethic: Long hours are often part of the job as you juggle client needs around the clock. Tenacity and dedication are vital.

• Tech savviness: You’ll rely on various software programs to originate loans in today’s digital mortgage environment.

Of course, having solid financial knowledge is also important. But many of the technical specifics can be learned through mortgage training courses.

Step 1: Meet Basic Requirements

Before pursuing loan originator licensing, make sure you meet some basic standards:

• Minimum age: 18-21 years old, depending on your state.

• Legal work status: You must be a U.S. citizen or permanent legal resident.

• Clean criminal history: Felony convictions may prevent licensure.

• Financial responsibility: Bankruptcies or tax liens could cause issues.

• College education: Typically not required but coursework in finance is helpful.

• Industry experience: Prior roles in banking, mortgage, or sales are preferred but not mandatory.

If you meet these prerequisites, you can move forward confidently.

Step 2: Complete Pre-Licensing Education

One main step to becoming a loan originator is fulfilling your state’s education requirements. This involves:

• Completing 20 hours of NMLS-approved pre-licensing courses.

• Potentially finishing additional state-specific education hours.

• Covering topics like ethics, federal laws, loan products, underwriting, and more.

• Using a reputable education provider like Morty or OnCourse Learning.

Pre-licensing helps ensure you understand key mortgage lending concepts and regulations before pursuing your license. The investment of time and money is well worth it.

Step 3: Pass the SAFE Mortgage Loan Originator Test

After completing education, you must pass the SAFE Mortgage Loan Originator Test, administered by the Nationwide Multistate Licensing System (NMLS).

Highlights of the test:

• It contains 125 multiple choice questions.

• You must score at least 75% to pass.

• Time limit is 120 minutes.

• Focus is federal mortgage laws and regulations.

• Cost is $110 for each attempt.

• You can take the exam before submitting licence applications.

Booking plenty of study time to ensure you pass on the first try is wise. Failing causes delays and retest fees.

Step 4: Submit License Application

With education and testing completed, you’re ready to file formal license applications through the NMLS system. This involves:

• Completing a Criminal Background Check.

• Getting fingerprinted.

• Filing an Individual Form (MU4) in the NMLS for your specific state(s).

• Paying required license and processing fees.

• Submitting any required documents to your state regulator.

On average, expect the licensing process to take around 45 days. Requirements vary by state so check guidelines. Morty provides helpful state-by-state breakdowns.

Step 5: Get Sponsored by a Mortgage Company

The final step is getting sponsored by a licensed mortgage company. This sponsoring entity essentially oversees your loan origination activities.

There are two main options for sponsorship:

Mortgage Lender: Such as a bank, credit union, or non-bank lender. You’ll work under their brand.

Mortgage Broker: Such as Morty. Brokers work with various lenders. More independence.

After getting hired, your sponsor will submit their company license credentials to NMLS for approval, activating your license.

Step 6: Build Your Loan Originator Career

Once licensed, focus on building your mortgage career by:

• Establishing a lending niche or specialty if desired.

• Creating a business plan and marketing strategy.

• Building a referral network and sphere of influence.

• Developing relationships with real estate agents and other partners.

• Continuing your mortgage education through courses and conferences.

• Providing five-star service that wins loyal clients.

With determination and consistent effort, you can build a book of business and thrive as a loan originator.

Why Become a Loan Originator?

If helping homebuyers finance one of life’s biggest purchases sounds rewarding, this career has many benefits:

• Earn significant income: Commission-based pay means your earning potential is high. Six figures is common.

• Flexible schedule: Set your own hours and be your own boss. Work from home if you desire.

• Make a difference: Guide people through a complex process to help them achieve their dreams.

• Variety of clients: Work with all sorts of buyers with unique needs and situations.

• New challenges: No two deals are alike, so you’ll never be bored.

• Advancement potential: With experience, progress to managing roles and leadership positions.

• Transferable skills: Build communication, sales, marketing, and tech abilities valuable in any field.

If you’re ready to take the next step toward becoming a loan originator, Morty can help. Our Academy trains new MLOs and our licensing specialists expedite the process. Reach out today to learn more!