Are you interested in learning about how to become a mortgage officer? Known in the industry as a mortgage loan originator, or MLO, these professionals play a key part in the process of helping buyers find homes that are right for them — typically, they are the primary contact person when a borrower completes a mortgage transaction.
More specifically, they help buyers find home loans that are right for them — mortgages that fit their budget and will allow them to stay in the homes they purchase for the long term.
Not only do MLOs support homebuyers, they serve a vital function in the real estate industry. With responsible MLOs, mortgage fraud and foreclosures drop significantly. Great MLOs are on the front lines in maintaining a stable home-buying market.
Many people find this to be an attractive career path. Mortgage loan officer is listed #14 in U.S. News & World Reports rankings for business jobs. The median salary for the position is $64,660 and it doesnt require any graduate-level education.
Have you ever wondered what it takes to become a mortgage loan officer? As a mortgage loan officer, you get to guide homebuyers through one of the most exciting yet stressful times in their lives – purchasing their dream home. It’s a rewarding career where you can make a difference while earning a good living.
If you enjoy working with people, have strong sales skills, and want to enter the booming mortgage industry, becoming a mortgage loan officer may be right for you. This comprehensive guide covers everything you need to know to launch a successful career as a mortgage loan broker.
What Does a Mortgage Loan Officer Do?
Mortgage loan officers, also referred to as mortgage brokers or loan originators help prospective homebuyers find financing options to purchase real estate. Their primary duties include
- Meeting with clients to discuss their financial situation and homebuying goals
- Collecting documentation such as tax returns, bank statements, and pay stubs to verify income and assets
- Evaluating the client’s finances to determine loan eligibility and affordability
- Presenting various mortgage loans and terms for the client to consider
- Advising clients on different types of mortgages available
- Connecting clients with third-party services such as real estate agents and home inspectors
- Gathering all necessary paperwork and supporting documents for loan underwriting
- Acting as the main point of contact throughout the lending process until closing
- Building and maintaining relationships with past clients and referral partners
Mortgage loan officers work at banks, credit unions, and mortgage brokerage firms. Their work involves a mix of office, remote, and field work visiting clients. It’s a fast-paced role that requires multi-tasking, organization, and communication skills to guide borrowers seamlessly through the mortgage process.
Mortgage Loan Officer Job Outlook
The US Bureau of Labor Statistics predicts employment for loan officers, including mortgage brokers, will grow faster than average at 8% between 2020-2030. This outpaces the average growth rate across all occupations.
Several factors are driving demand for mortgage loan officers:
- Rising home prices requiring larger mortgages
- Low housing inventory requiring quicker financing
- Higher interest rates requiring loan advice
- Growing millennial homebuying market
- Retiring loan officers needing replacements
Strong job growth and high turnover create abundant opportunities for new mortgage brokers to enter the field. The most job openings occur at mortgage companies, but banks and credit unions also frequently hire.
Steps to Becoming a Mortgage Loan Officer
Follow these key steps to launch your mortgage loan officer career:
1. Earn a High School Diploma or GED
A high school diploma or equivalent is the minimum education required for mortgage licensing. Coursework in math, business, and finance provides useful foundation knowledge.
Many aspiring loan officers pursue further education such as a finance associate degree or bachelor’s in a related major like economics or business administration. However, this is not an industry mandate. Work experience and on-the-job training are equally important.
2. Consider Getting a Job at a Bank or Mortgage Company
One option is to start working in an entry-level position at a bank or mortgage company to gain industry familiarity. Look for roles such as mortgage loan processor or underwriter assistant. Valuable mentorships from experienced brokers can prepare you to transition into a loan officer position in the future.
3. Complete Mortgage Loan Officer Licensing Requirements
You must complete several steps to attain the proper mortgage licensure:
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Pre-licensing education: All states require 20 hours of NMLS-approved courses in mortgage lending fundamentals.
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Background check: You must submit fingerprints for an FBI criminal background check.
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Pass exam: The National SAFE Mortgage Loan Originator Test evaluates your mortgage and lending knowledge. A score of 75% is required to pass.
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State licensing: Every state has its own mortgage broker licensing requirements. You must register as a loan officer in the state(s) you’ll be working.
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NMLS registration: The Nationwide Multistate Licensing System allows you to apply for licenses in multiple states.
On average, it takes three months to become a licensed mortgage loan officer after completing the above steps.
4. Apply for Mortgage Loan Officer Jobs
Once licensed, start applying for mortgage loan officer positions at banks, credit unions, and mortgage companies in your location. Look for entry-level roles like Mortgage Banker I or Junior Loan Officer to build experience under senior brokers.
Be prepared to explain why you want to become a mortgage broker during job interviews. Share how your sales ability, finance knowledge, communication skills, and desire to help homebuyers make you an ideal candidate.
Your licensing credentials will qualify you for roles, but exhibiting genuine passion for the field gives you an edge. Be willing to start in a trainee position to prove yourself on the job.
5. Consider Being an Independent Mortgage Broker
After a few years of experience, highly motivated brokers may want to branch out on their own as independent agents. You can either choose to be an independent contractor affiliated with a larger retail lender or start your own privately owned mortgage brokerage.
Opening your own shop lets you earn higher commissions but also comes with more risk and responsibility. Expect to invest in licensing, training, marketing, office space, and support staff when starting a brokerage business.
6. Continue Your Mortgage Education
All states require mortgage loan officers to complete annual continuing education to renew their licenses. You must take at least 8 hours of approved courses on latest laws, regulations, and practices each year.
Further optional certifications such as Certified Mortgage Banker (CMB) and Certified Mortgage Professional (CMP) can boost your expertise and credentials.
Essential Skills for Mortgage Loan Officers
These important soft and hard skills help mortgage loan officers succeed:
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Salesmanship: Ability to pitch loan products persuasively to clients
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Communication: Listen carefully and explain mortgage options in easy-to-understand language
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Service-focused: Patience and desire to provide an exceptional client experience
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Analytical thinking: Review clients’ finances thoroughly to determine best mortgage programs and terms
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Organizational skills: Juggle high workloads and multi-task effectively
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Technological competence: Leverage latest software and tools to enhance productivity
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Interpersonal skills: Build rapport and trust with borrowers
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Motivation: Tenacity to work hard and follow up on many leads to close loans
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Multitasking abilities: Handle various client cases at different application stages capably
Mastering these mortgage broker skills takes practice but leads to satisfying and lucrative career success.
The Benefits of Being a Mortgage Loan Officer
Why should you consider becoming a mortgage broker? Here are excellent advantages:
Help People’s Financial Lives
The most fulfilling aspect is guiding homebuyers through a complex, financially momentous event in their lives. You get to help clients determine mortgage products to fit their budget and financial goals.
Earn Lucrative Income
Top mortgage loan officers often earn $100,000 or more per year. Commission-based compensation gives driven brokers opportunity for excellent earnings.
Flexible Schedules
Once established, mortgage brokers can often set their own hours and manage their workday relatively autonomously. You schedule client meetings when convenient.
Continuous Learning
Given constantly evolving mortgage products and regulations, you regularly learn new information to stay current. Ongoing education keeps the job dynamic.
Be Your Own Boss
Experienced brokers can operate as independent agents or start their own firms to increase income.
Opportunity for Rapid Advancement
Outstanding loan officers can advance into management roles quickly in this sales-driven field.
For the chance to earn a high salary helping homebuyers get financing while enjoying flexible working conditions, look into becoming a mortgage loan officer.
How Much Do Mortgage Loan Officers Make?
According to the Bureau of Labor Statistics, the average national salary for mortgage loan officers is $63,960 per year. However, incomes can vary substantially based on these key factors:
Location
Your geographic region impacts earnings. For example, mortgage loan officers in New York and California earn among the highest average salaries, at $121,930 and $116,813 respectively.
Experience
As you build your expertise and professional network over time, your compensation increases. Veteran brokers earn more than new beginners.
Employer Type
Mortgage brokers at banks and credit unions usually earn a base salary plus commissions. Mortgage company loan officers often work strictly on high commission.
Independent brokers have unlimited earning potential but less stability.
Loan Volume
The more loans you originate, the more you can earn. Highly productive mortgage officers make over $100,000.
Overall mortgage industry expansion, home price increases, low rates, and high demand suggest the earning potential remains strong for mortgage loan officers.
Job Outlook for Mortgage Loan Officers
The job outlook for mortgage loan officers looks very promising. The Bureau of Labor Statistics projects 8% employment growth for loan officers between 2020-2030, faster than the average across all occupations.
Several key trends are fuel
After You Get Licensure
Once you receive your license, you can begin work as a home loan originator. Some MLOs work independently, but newbies often prefer to begin with an established business that has an existing client base, such as a bank, mortgage lending institution, or credit union.
With all the bureaucracy involved in the licensure process, it is important to keep your focus on the goal you had in mind when you first started looking into how to become a loan officer — helping people move into their dream homes.
Buying property can be a complicated and stressful process for your average person, but a qualified and supportive MLO can make the experience easier, allowing homebuyers to enjoy their investment with the knowledge they have secured the best home loan possible.
The work doesnt end here, though. It is important that MLOs keep up with professional development to keep their license and stay current with mortgage lending practices.
Once you have a license, you must meet requirements to maintain active licensure status. An active status shows you meet all requirements of the federal registration process. You will need to renew your license annually, take continuing education courses, and keep all information filed with the NMLS up to date.
For example, if you plan to switch and work for a new company, you have to inform the NMLS of this move. The NMLS website includes helpful resources for licensure renewal, including handbooks, checklists, and information on fees, deadlines, and other requirements.
MLOs are required to complete eight hours of NMLS-approved continuing education annually to qualify for license renewal. It is the MLOs responsibility to complete this education and the renewal process. If you fail to do so, you could end up losing your license.
Continuing education is required to include:
- Three hours of federal law and regulations
- Two hours of ethics instruction on fraud, consumer protection, and fair lending issues
- Two hours of training related to lending standards for the nontraditional mortgage product market
- One hour of undefined instruction on mortgage origination, which may be fulfilled by completing a state-specific course depending on the states requirements
Before You Get Licensure
If you want to become a mortgage loan officer, you probably have a number of questions about what the position entails.
Lets go over everything you need to think about before you close your first loan.
In terms of personal qualities, MLOs need to be detail-oriented people.
As an MLO, you will be collecting a range of information from potential borrowers and submitting this information to lenders. This information needs to be handled carefully and presented accurately. Staying organized is critical because the clients you work with will often be making the most important buying decision of their lives.
It is also beneficial if you are an outgoing person. You will be working with a wide range of people, and referrals tend to make up a large portion of your business. Making a good impression is key.
Knowledge of the real estate industry — or at least willingness to learn — is another important quality. MLOs need to stay up to date on how mortgage lending is evolving. New products, innovations, and regulations are always part of the mix.
If you are the kind of person who is always learning something new, you may want to become a mortgage loan originator.
MLOs deal with potential homebuyers sensitive financial information every day. They also act as a liaison between lending institutions and potential borrowers. Lenders need to have loans repaid; borrowers need to stay in their homes — and the MLO is a cornerstone to ensuring that both are in the best situation possible.
For anyone who wants to become a loan originator, it is a career that requires you to have financial character and stability. This is to prevent bad actors from becoming involved in the industry, which was one of the main problems that led to the 2008 financial collapse.
This means you need to meet certain financial requirements and have a clean criminal history. Any of the following scenarios are likely to result in licensure rejection:
- Criminal conviction related to fraud
- Poor credit history
- History of foreclosure or other significant unpaid debts
- Previously revoked licensure in other states
It is always best to disclose as much as possible on your application. There are instances where regulators will accept an applicant even though they have potential red flags. For example, many states have legal exceptions for applicants with unpaid medical debt. A criminal conviction unrelated to fraud, such as a DUI, also might not result in licensure rejection.
At this point, you might be asking the question: how long does it take to become a loan officer? The answer is that it all depends on how you approach it, but rest assured if you begin investing time and money in the process, you will want to complete it.
Doing your research before diving into pre-licensure courses is important.
The National Mortgage Licensing Service (NMLS) is the main regulatory body for MLOs and has a wealth of useful information, including state-specific requirements for licensure. Here at The Coop, we have information on everything from Online CE and Live CE to a community of professionals tackling a range of questions and a list of resources for MLOs. Taking the time to understand exactly how to become a mortgage loan originator in the first place will mean you are confident going into training.
One piece of good news is that you dont need a specific degree to become involved in this field. MLOs typically come from a background in business, banking, economics, or finance, but it isnt required. Instead, MLOs must obtain licensure through passing a test, taking pre-licensure education courses, and submitting information for approval by the NMLS.
Lets say you have decided mortgage loan origination is the career path for you. What are your next steps?
The first and most important step is obtaining a valid mortgage origination license. It is illegal to practice mortgage loan origination without a state-issued license. The following will detail the steps you need to take for licensure.
One thing to remember is that each state has specific guidelines that apply to MLO licensure, and state agencies are the ones to actually issue licenses.
But there are a number of requirements listed in federal legislation that are applicable across the board. It is worthwhile to become familiar with the federal Secure and Fair Enforcement Act for Mortgage Licensing of 2008 (i.e. SAFE Act), a major bill passed by Congress in the wake of the mortgage lending crisis.
Per the SAFE ACT and the NMLS, MLOs are required to:
- Obtain licensing from their respective states
- Register with the NMLS
- Provide authorization to obtain a credit report
- Provide a variety of identifying information
- Provide fingerprints for a criminal background check
- Provide a financial services employment history for the past 10 years
- Disclose any financial regulatory body charges against them
- Attest to the completeness and accuracy of the information provided
One key step in how to become a mortgage originator is to complete courses as required by the NMLS. Applicants are required to take 20 hours of pre-licensure education courses, including the following:
- Three hours of Federal law and regulations
- Three hours of ethics that shall include instruction on fraud, consumer protection, and fair lending issues
- Two hours of training related to lending standards for the nontraditional mortgage product market
- Twelve hours of undefined instruction on mortgage origination
In addition to this, each state has specific requirements for education, typically on state-specific topics. This can range from education on alternative lending products like reverse mortgages, to how to spot red flags on a mortgage application.
Applicants should refer to their respective states guidelines on how to become a licensed loan officer.
Applicants for MLO licensure are required to pass the SAFE MLO test with a score of at least 75%. The test evaluates candidates on their knowledge of state and federal mortgage lending law. Many states have adopted the Uniform State Test, which applicants only need to take once. This makes it easier for licensees to apply for licensure in other states.
Per SAFE Act requirements, there is a waiting period between retaking the SAFE MLO test. On the first and second failures, applicants must wait 30 days each between test retakes. If an individual fails the test three times, they must wait 180 days before taking the test again.
Some other NMLS requirements include:
- Sponsorship: An individuals MLO activities must be sponsored and supervised by their employer. State regulators must approve sponsorships.
- NMLS Unique Identifier: An NMLS Unique Identifier is a number permanently assigned to each company, branch, and individual with an NMLS account. This system was designed for the purpose of better tracking each company and licensee, and is required to appear in all advertisements for mortgage origination services.
- Payment of fees: Applicants are required to pay fees in order to obtain licensure. The amount of these fees varies by state.
How to Become a Mortgage Loan Officer in 2024! (Step by Step)
FAQ
Is it hard to make money as a mortgage loan officer?
Is it hard to get hired as a loan officer?
How much does a mortgage loan officer make in Alaska?
What is a mortgage loan officer?
A mortgage loan officer is a professional who helps potential home buyers obtain financing for their home purchase. Mortgage loan officers work with a variety of lenders to find the best mortgage terms and rates for their clients.
How do I become a loan officer?
Licensing requirements to become a loan officer can vary from state to state. Loan officers who wish to work with mortgages, however, must meet federal guidelines. This will require loan officers to get Mortgage Loan Originator (MLO) licenses from their state, and register with the National Mortgage Licensing Service (NMLS).
How do I become a mortgage vs loan officer?
Identifying mortgage vs loan is one of the fundamental requirements for becoming an Officer is for you to have completed your schooling and some foundational courses. Gaining foundational knowledge on Finance and Mathematics can greatly improve the skills necessary to become an MLO. Other than that, you should be at least 18 years old or above.
How do I become a mortgage lender?
Here are some steps to gain practical experience in the field: 1) Seek entry-level positions: Look for entry-level positions in banks, credit unions, or Mortgage lending companies to get started. These positions may include roles such as loan processor, Loan Officer assistant, or Mortgage underwriter.