What You Need to Know to Become a Licensed Mortgage Loan Officer in Texas
Texas is the land of opportunity and is one of the strongest states with a myriad of fast-growing industries and sectors.
Due to a rapidly growing economy, rising employment rates, and a massive area, the demand for real estate and housing in TX is on the rise.
As more consumers plan to purchase a home in Texas, the state is witnessing a growth in the number of job applications for mortgage loan officers (MLOs).
MLOs are professionals who work on behalf of lenders and credit providers to help borrowers obtain mortgages to finance a new home or refinance an existing one.
As per the Bureau of Labor Statistics in the U.S., the profile of loan originators is currently amongst the top 5 fastest growing jobs in the industry.
Working as a loan officer in TX can be a great career choice for you, especially if you want to earn a six-figure income annually while enjoying a stable work-life balance.
A career in the mortgage lending industry offers exciting growth prospects to individuals who are sincere and determined to succeed in a growing market.
If you want to become a mortgage broker in Texas, work with clients and help them buy mortgage products, it will require getting a license.
Since only licensed individuals are allowed to work with consumers and provide financial advice, it is important to prepare to complete all the steps to get your Texas MLO license.
This requires you to complete a set of license requirements including licensing education, background verification, and regulatory compliance.
To help you get started, this article will outline all the key steps you must complete to start your career in Texas’ mortgage lending industry.
What does a Mortgage Loan Officer do
Choosing a career is an important decision and one that you must carefully consider and plan for.
Before we dive deep into what it takes to become a loan originator in Texas, let us walk you through the job profile and the tasks you will perform in this role.
MLOs are employed by financial institutions such as banks, credit companies, and private lenders to help borrowers obtain mortgages.
Although your day-to-day job responsibilities might vary, you can expect to perform a mix of accounting, administrative, pre-sales, and customer service-oriented tasks such as:
- Meet and interview prospects and potential clients who are interested in applying for a mortgage in Texas.
- Collect the personal, financial, and credit information and stipulations of individuals who are searching for mortgage financing.
- Understand the mortgage needs and requirements of borrowers who want to finance a new or existing property purchase.
- Evaluate the financial health and creditworthiness of prospective clients based on their income, assets, credit history, income, and other key factors.
- Review the loan applications submitted by borrowers and ensure they are meeting the standards and fulfilling the requirements.
- Educate the clients about the various loan plans and guide them about the specific mortgage terms, payment schedule and interest rates as per their needs.
- Assist your clients through the various stages of applying for a mortgage - from suggesting suitable loan options to completing paperwork.
- Act as a liaison between the loan sources and the borrower to help bridge the gap between the two and coordinate a seamless loan closing process.
- Respond to client queries and clarify their doubts related to the mortgage tenure and plan, payment terms, interest rates, and refinancing options.
- Maintain regulatory compliance with the mortgage lending industry guidelines as well as the state and federal laws as a loan originator.
Now that you have learned about the job duties and responsibilities, you might be wondering how do I become a mortgage broker in Texas and start a career,
In the coming sections, we will walk you through the step-by-step process you need to follow to get started.
Benefits of Getting your MLO license
The primary purpose of getting an MLO license is to ensure regulatory compliance with Texas state and federal laws.
As per the NMLS (Nationwide Multistate Licensing System) - which is the largest database for all institutions, professionals, and firms in the mortgage lending industry - it is mandatory for aspiring loan officers to hold a valid, active license.
In 2008, the SAFE (Secure and Fair Enforcement) Act was established to protect the rights and interests of consumers and prevent fraudulent activities in the industry.
Under the S.A.F.E Act, all active mortgage loan originators/officers working in Texas independently or with a financial institution must have a state-issued license.
The reason why getting your license is crucial is simply because, without a license, you will not be legally allowed to work with consumers.
The purpose of the NMLS is to ensure that only skilled, knowledgeable professionals with good moral character are allowed to work with clients.
As a result of this, getting a mortgage loan originator license is a mandatory requirement in all states, including Texas, for anyone who wants to work with clients.
If you are still evaluating the benefits of getting a mortgage loan license in Texas, here are some key advantages you stand to gain with a license:
- You will be compliant with the state and federal licensing regulations
- You will become more knowledgeable and skilled in your profession
- You will attract more clients and significantly boost your earning potential
- Your professional network will grow exponentially as a licensed professional
- You will be able to serve a bigger clientele across markets
Note that getting your license requires you to gather the required information and understand the licensing requirements clearly.
Now that you are clear about why getting a license is both mandatory and beneficial for your career growth, let us outline the process for you.
What are the basic eligibility requirements for an MLO license
Like other states, Texas also follows the NMLS code and licensing guidelines for aspiring professionals and firms in the mortgage lending industry.
As per the NMLS licensing guidelines, it is mandatory to prove your eligibility before applying for an MLO license. You need to meet and fulfill a set of basic statutory requirements such as:
- You must be at least 18 years of age or older
- You must have a high school diploma or GED in education
- You must be a legal resident of the United States or a lawfully residing alien
If you qualify, you can register yourself on the NMLS website and obtain your unique NMLS identification number.
Steps To Become A Licensed MLO License In Texas
After creating your NMLS account, you can complete the step-by-step process to obtain your license and start working in the mortgage lending industry in TX.
The first step is to complete pre-license education and training required to work as a professional and assist consumers in the best way possible.
The NMLS requires aspiring loan officers to complete a minimum of 20 hours of pre-license education from a state-approved education provider.
For applicants in Texas, you are required to complete an additional 3 hours of state-specific courses and subjects.
Thus, to become a licensed loan officer, you must complete 23 hours of NMLS-approved curriculum.
The purpose of completing pre-license education is not merely to fulfill a mandatory license requirement, but to obtain the necessary knowledge and skills to work with clients.
To become a successful professional and build a thriving career, you will need a strong foundation of the principles of mortgage lending, industry laws, regulations, and other topics.
Some of the common courses you will cover during your pre-licensing education are:
- Federal Law (3 hours)
- Ethics (3 hours)
- Non-traditional mortgage lending (2 hours)
- General Electives (12 hours)
- Texas-specific state laws (3 hours)
Note that students have the flexibility to choose between joining a classroom-based real estate college or enrolling in an online mortgage loan officer course in Texas.
Luckily, Texas has numerous real estate colleges, schools, and online course providers which you can choose from to meet your learning needs and goals.
After completing 23 hours of pre-license coursework, you will have to take the SAFE MLO licensing test in Texas.
Under the SAFE Act, it is mandatory for aspiring loan officers and mortgage brokers to pass the MLO license exam.
The license test consists of 120 multiple-choice questions based on the courses and topics related to your pre-licence course curriculum.
Passing the exam is important to obtain a license and to do so, you must score at least 75 percent or above.
Many students often wonder about the difficulty of the test and the chances of passing the test on their first attempt.
Although the MLO license exam is not easy, if you are well-prepared and have practiced the common questions, you can clear it in your first attempt.
Note that if you are unable to pass the test on your first attempt, you can retake the test after 24 hours by paying the exam fee.
Once you have passed the licensure exam, you will become eligible to apply for a MLO license and submit your license application to the NMLS for review.
However, to obtain your license, you must also complete a federal criminal history and background verification check.
Under the SAFE Act, it is mandatory for aspiring professionals to meet the minimum standards of honesty, integrity, and truthfulness.
Along with your license application, you need to submit an electronic scan of your fingerprints.
You can log into the NMLS website using your unique ID and schedule a scan at a state-approved live scan vendor by choosing a date and time.
Additionally, you might be required to submit a copy of your latest credit report along with your fingerprint scan.
Once you have completed all the above steps and submitted your license application, you will have to pay a $325 application processing fee to the NMLS.
If your documents are verified and your application is approved, you will receive your Texas MLO license within a few weeks.
Congratulations on making it this far! You are now just a step away from working with clients in a dynamic, high-growth career.
However, you must activate your mortgage loan officer license in Texas first by finding a Texas employer who will be willing to sponsor you.
As per the SAFE Act, newly licensed professionals must work under the supervision of a state-licensed firm or institution.
This step is crucial as it will help you gain practical experience and become hands-on with the industry laws and best practices.
Once you find employer sponsorship, you can visit the NMLS website, log in using your NMLS identification number, and submit your sponsorship details to activate your license.