Mortgage Loan Originator Career: Pros, Cons, Job Opportunities
Are you an aspiring mortgage loan originator, looking to make a career in this profession? Are you unsure about the pros, cons, and job opportunities in this field?
This post will answer all the questions that you might have about a mortgage loan originator career.
Key Takeaways
- Introduction to a Mortgage Loan Originator Career
- What is a Mortgage Loan Originator?
- Responsibilities of a Mortgage Loan Originator
- Pros of Being a Mortgage Loan Originator
- Lucrative Earning Potential
- Flexible Work Schedule
- Helping People Achieve Homeownership
- Growth Opportunities
- Cons of Being a Mortgage Loan Originator
- Commission-Based Income
- High Stress Levels
- Constantly Changing Regulations
- Long Working Hours
- Job Opportunities in the Mortgage Industry
- Mortgage Broker
- Mortgage Underwriter
- Loan Officer
- Mortgage Processor
- Mortgage Loan Closer
Introduction To A Mortgage Loan Originator Career
What Is A Mortgage Loan Originator
If you are a home buyer, going through the loan and the financial aspects can be quite challenging. Fortunately for you, the real estate has professionals who will handhold you through the process and make it simple for you. These are mortgage loan originators whose primary task is to guide borrowers through the loan and refinance aspects.
A mortgage loan originator (MLO), generally called a loan originator, is a key player in the mortgage process. An MLO is a bridge between the borrower and the lender right from the first contact through to closing, making the work as seamless as possible. An MLO works for a bank or lending institution and earns a salary or a commission on the amount sanctioned to the borrower.
The Role Of A Mortgage Loan Originator
MLOs are the go-to persons for borrowers looking for a mortgage loan or refinancing. Starting from the mortgage application to the initial inquiry to closing, MLOs help borrowers all the way. They also gather credit and financial information of borrowers, assess requirements, negotiate rates, and finally submit the documents to the loan underwriters.
Even though an MLO will be the representative of a borrower, the final decision of the amount of loan to be sanctioned is not in their hands. It is left to the underwriting department of the lending institution to evaluate the risk levels of borrowers.
MLOs have deep insights into the real estate market and always stay updated with the latest financial products and rates. They also work with the homebuyer’s real estate agent to make sure that the contract guidelines do not lapse due to the delay in loan sanction.
As in every profession, there too are several pros and cons of a mortgage loan originator career. We will list them out now starting with the pros first.
Pros Of Being A Mortgage Loan Originator
Lucrative Earning Potential
A mortgage loan originator in the USA has an average base salary of $169,159 as per data of 2024. However, the salary after a year only in the profession is $143,973, progressively going up to $247,845 after around 10 years of experience in this field. This salary is comparable to the best of other sectors in the USA.
MLOs also work on a commission basis which is about 1% of the loan sanctioned to a borrower. That means that an MLO rakes in about $5000 on a loan of $500,000, an amount which is average for a home loan. Consider just two to three loans sanctioned per month and the commissions earned can be very substantial.
This earning potential is one of the main draws of a mortgage loan originator’s career.
Flexible Work Schedule
Mortgage loan originators are not tied down to a 9 to 6 job. Rather, they have to go out of their offices, meet borrowers, liaise with real estate agents, and collect documents and papers from various sources. Hence their work schedules are flexible. Further, since an MLO may also choose to work on a commission, the earnings per month can be pre-decided by the MLO.
Once the target per month is reached, more focus can be given to spending quality time with friends and family.
There is a flip side to this too. Potential borrowers may want time to be allotted to them by MLOs outside office hours for discussion or collection of documents. Hence, MLOs may be required to work in the evenings or over weekends.
Helping People Get Their Dream Homes
It is not always that job satisfaction can be marked by earnings. Many people draw high incomes but are often mentally alienated from their jobs. MLOs are never short of the happiness found in handing the keys to new homes to clients.
This is because MLOs closely work with the borrowers right through the loan sanction process. From the time of getting the mortgage application to processing the loan to getting it sanctioned by the competent authorities, MLOs have a crucial role to play. Borrowers too heavily depend on MLOs to fulfill their wishes of owning a home. The satisfaction of seeing the smiles on the faces of borrowers makes a mortgage loan originator career worth the effort.
Growth Opportunities
Apart from good earnings, job security, and job satisfaction, there are ample opportunities for career growth. MLOs might move to bigger banks and financial institutions where they get access to a larger client base. Some of them take on additional roles and responsibilities. Top-performing MLOs get promoted to managerial ranks, leading to a hike in salary and commission earned.
However, to be a top performer, get a mortgage loan originator license. For this, you must complete an MLO license course and pass a licensing exam. It is advisable to go through an online mortgage originator course as it offers the flexibility to study anytime from anywhere.
Cons Of Being A Mortgage Loan Originator
Take an overview of any industry and you will find that each comes with a specific set of challenges. So is the mortgage sector but that does not mean that with the right dose of perseverance and dedication, they cannot be overcome.
Let us look now at some of the cons of the mortgage industry that will take a lot of your time, commitment, and hard work to get over in your mortgage loan originator career.
Commission-based Income
We have discussed before that commission-based income is a pro for a mortgage loan originator career since there is scope for unlimited income. However, this earning structure as opposed to a regular income has its drawbacks too.
For one, you have to get a steady stream of borrowers to guarantee a regular monthly income flow. This cannot be guaranteed as market trends and mortgage rates might not always be right for investment in real estate. Hence you will go through lean periods in your career where a borrower a month can be tough to achieve.
High Stress Levels
Apart from ensuring that you can generate and close leads at regular intervals, an MLO’s job is a high-stress one. You have to constantly meet deadlines as buyer’s agents and borrowers are always under pressure from sellers to close a deal as quickly as possible. Too much delay in processing mortgage applications and appraisals might lead to a seller looking for other buyers.
This possibility can take a toll on your health as an MLO as you have to rush constantly to have the loan sanction letter ready in time.
Constantly Changing Statutory Regulations
The mortgage loan sector is complex with a lot of rules and regulations governing the industry. These are constantly in a set of flux with state and federal governments introducing fresh pieces of legislation including mortgage rates at regular intervals. The mortgage industry is volatile too and unless you are updated with the latest laws, you cannot be a success in this field.
Keeping up with the trends is not easy as a lot of reading and education is needed outside working hours. This in turn leads to high stress levels too and is the reason why this aspect is one of the cons of being a mortgage broker.
Long Working Hours
Having flexible working hours and being your boss comes with its drawbacks too. You might have to work as per the borrowers’ timings which can be in the evenings and over the weekends too. Additionally, you have to interact with buyers’ agents, appraisers, and underwriters to get loans sanctioned. The whole process for a single loan can take days to complete. All this while, you have to be in touch with all these professionals, entailing putting in long working hours.
Now that we have put all the cards on the table about the pros and cons of being a mortgage loan originator, it is up to you to decide if being an MLO is a good career.
Opportunities in the Mortgage Industry
Though we have limited our discussion till now to mortgage loan originators, there are several other jobs in the mortgage industry. We will now check them out in some detail.
Mortgage Broker
Unlike a mortgage loan originator, a mortgage broker does not work for a bank or a financial institution. Instead, a mortgage broker works for a brokerage firm and checks out various loan options and interest rates offered by lenders. The most suitable ones are then advised to clients. Mortgage brokers work on commissions earned from loan sanctions.
Mortgage Underwriter
Also referred to as a credit analyst, an underwriter’s responsibility is to evaluate the creditworthiness of a client before a loan is sanctioned.
Loan Officer
A mortgage loan officer is a licensed professional who offers a lender’s loan products to potential borrowers. Loan officers work on a salary-plus-commission basis and must fulfill specific educational requirements to get a license.
Mortgage Processor
It is the responsibility of a mortgage processor to ensure that all the formalities and administrative tasks required to process a loan or refinance application are fulfilled. A processor must be aware of all the latest rules governing the mortgage industry.
Mortgage Loan Closer
A mortgage loan closer works for a bank or any financial institution. His/her work starts after a mortgage loan is approved. A loan closer reviews all the documents and paperwork submitted by a borrower and then readies the closing documents. These include the final closing disclosures and estimated settlement statements.