How to become a licensed loan officer in a structured way
When consumers think of a real estate purchase, they think of getting a mortgage. Without a mortgage, buying a new home might seem like a distant dream for many.
For most people, buying a new home requires financing the purchase and offloading the massive investment into smaller, manageable recurring payments.
First-time homeowners or frequent buyers prefer choosing a suitable mortgage plan to make smart financial decisions and get the best value for their money.
Most importantly, a mortgage helps consumers manage their expenses in the long term better and gives them the opportunity to turn their home ownership dream into a reality.
With rising demand for housing and residential real estate, there is growth in the number of job openings for mortgage loan officers.
Mortgage loan officers are employable by financial institutions such as banks, credit unions, and lending companies. They play a pivotal role in helping lenders connect with borrowers.
The U.S. The Bureau of Labor Statistics has predicted that the job outlook for mortgage loan officers is poised to grow significantly in the ongoing decade which means now could be a good time to enter the industry.
Now comes another important aspect which is the financial compensation of working as a mortgage loan originator.
A career in the mortgage lending industry is known for being financially rewarding and lucrative and it is easy to make a six-figure income.
Your income prospects will vary depending on your skills, experience, and your employer.
However, loan officers can earn as much as $!40K annually while enjoying opportunities for growth and promotion in their careers.
If you are keen to learn more about starting a career in the mortgage lending industry, we have put together this in-depth article which covers all the key aspects in one place.
The key to enjoying the career benefits of a mortgage loan officer is to obtain your mortgage loan originator license from your state.
Since mortgage lending is a heavily regulated industry, it is mandatory to obtain a license to become eligible to work with clients.
To help you get started, this article will outline all the steps required to become a licensed mortgage loan officer and embark on an exciting career journey.
Benefits of a career as a mortgage loan officer
Starting a new career might seem overwhelming, especially if you have limited knowledge of the industry, its rules, regulations, and career profile.
Mortgage loan officers are licensed professionals who are employed by lenders, banks, and credit companies to assist borrowers in obtaining mortgage financing.
As a mortgage loan officer, you will be responsible for working with clients from all walks of life and helping them navigate the different steps of getting a mortgage.
A career as a mortgage loan officer can be rewarding and challenging, especially as you can reap good financial benefits and perks while getting the satisfaction of helping people achieve their home-ownership goals.
However, to work with clients and assist them in making financial decisions, you must complete the mandatory eligibility requirements and earn your MLO license first.
As an entry-level loan officer, you can earn around $80 annually while getting the opportunity to gain experience, expand your professional network, and advance in your career.
In addition to lucrative financial compensation, you can leverage a host of exciting benefits while working as a licensed loan officer in the United States.
MLOs generally enjoy health insurance, flexible work schedules, retirement plans, and company-sponsored tours.
Another key benefit of working in the mortgage lending industry is that job security as the number of job opportunities for licensed loan officers is poised to grow in the coming years.
The benefits of working as an MLO go beyond competitive compensation, rewarding job perks, and strong job security.
Many individuals often choose this path to be able to work in a career where they can be of value to others and help people realize their home ownership dreams.
If the above benefits sound exciting to you, now is the time to prepare for a successful career as a licensed loan originator.
However, to be good at what you do, it is important that you first understand what are the job duties and responsibilities of a mortgage loan officer.
What does a mortgage loan officer do?
Getting a mortgage is a complex, time-consuming process that involves multiple steps and actions.
Mortgage loan officers play a pivotal part in this journey as the single point of contact for borrowers who want assistance throughout the entire financing process.
As a result of the lengthy process, mortgage loan officers are responsible for completing a variety of tasks and duties as part of their job profile.
Depending on your employer, you might be asked to perform a specific set of job responsibilities as a loan officer. Let’s take a look at the common ones in detail below.
- Offering financial guidance and mortgage loan assistance to clients
- Acting as an intermediary between lenders and borrowers
- Meeting with prospective clients and understanding their loan requirements
- Assisting clients in choosing the most suitable loan products and plans
- Evaluating borrower’s credit scores, income, tax records, and financial history
- Educating clients about the different mortgage plans in the market
- Coordinating with underwriters and appraisers to identify risks
- Updating records of loan transactions and financial documents
- Offering customized lending packages to clients
- Navigating clients through the different steps for obtaining a mortgage loan
- Generating insights into the market and industry trends for employers
- Ensuring a smooth and seamless loan closing journey for clients
- Maintaining compliance with state and federal authorities for loans
As most homeowners and real estate buyers prefer to take a loan to finance a home, loan officers are highly sought-after to ensure clients are able to achieve their goals easily.
Since you are expected to juggle multiple tasks and complete additional responsibilities, it is important that you complete the mandatory education and training required to get good at the job.
Next, let us take a closer look at what it takes to become a licensed mortgage loan officer in the United States and embark on an exciting journey.
Requirements for getting your Mortgage License
Mortgage loan officers play a crucial role in the homebuying journey and they assist consumers in making important financial decisions.
This is why it is important for mortgage loan officers to have the required knowledge, training, and skills required to become proficient at assisting borrowers.
Getting a license is the most crucial step to prove your competency as a professional loan officer.
The licensing journey starts with the NMLS (Nationwide Mortgage Licensing System) - your MLO license will be issued to you by the NMLS irrespective of the state you are residing in.
You can register on the NMLS website and create your unique NMLS identification number which will be handy for future use such as license renewal and updation.
Next comes the basic statutory requirements to qualify for applying for a MLO license in your respective state.
According to the National Mortgage Licensing Service (NMLS), every applicant must meet the below-listed eligibility requirements:
- You must be at least 18 years of age or older.
- You must have a high school diploma or related education.
- You must be a legal resident of the United States or a lawfully admitted resident.
- You must have a bachelor's degree in finance, accounting, or business. administration.
If you fulfill the above eligibility requirements, you can proceed to complete the next step in your licensing journey which is completing pre-licensing education.
The NMLS requires every applicant to complete 20 hours of NMLS-approved pre-licensing education to learn about state and federal laws.
Plus, the education will help you familiarize yourself with the knowledge and training required to work in the mortgage lending industry.
The 20 hours of mortgage loan originator course covers:
- Mortgage origination related information (12 hours)
- Fair Practices, Fraud, and Ethics in Lending (3 hours)
- Lending standards and guidelines (2 hours)
- Federal Laws and Regulations (2 hours)
Note that your state might require you to complete additional courses as part of the qualifying education requirements.
It is recommended that you check with your local state authority to learn about the most recent requirements for MLO pre-licensing education.
Students can complete their education by joining a physical, classroom-based school or enrolling in an online MLO license course based on their preference.
Many students prefer the flexibility of learning from anywhere on any device and saving time by not commuting to a fixed classroom.
Irrespective of your preferred medium of learning, it is important that you only choose a NMLS approved education provider to complete your education.
After you have completed the mandatory pre-licensing education, the next step is to take the MLO licensing exam in your state.
According to the NMLS, every applicant must take the SAFE (Secure and Fair Enforcement) test and score at least 75 percent to pass the exam.
The exam is a closed-book, multiple-choice questions test that covers the topics and subjects covered in your mortgage licensing course.
Regarding the SAFE MLO exam, it is important to note that there might be state-specific rules and guidelines which is why it is recommended to check with your state’s governing authority for the most accurate and up-to-date information.
Once you have successfully passed the exam, the next requirement is to complete the background verification and criminal history check.
To do so, you must submit an electronic scan of your fingerprints along with an updated credit report to the NMLS for investigation.
Along with the above verification documents, you can also submit your MLO licensing application to the NMLS for review and approval.
Once your federal criminal history check is completed and your application is verified, you will receive your MLO license within a few weeks.
Lastly, you need to meet another important requirement to start working with clients in your state. The NMLS requires all licensed officers to find employer sponsorship and work under the supervision of senior loan officers in their state.
After receiving your MLO license, you can start searching for employer sponsorship in your local region or state and choose the most suitable one based on their experience, commission structure, and resources.
Closing Thoughts
Employment opportunities in the mortgage lending industry are on the rise, thanks to the growing demand for housing in the U.S.
If you are ambitious and driven to build a long-term, thriving career, now is the time to start working towards your goal of getting an MLO license.
Be it part-time or full-time, working as a mortgage loan officer can be an exciting and fulfilling career path.