Your Guide to Acing the MLO Test with Confidence
Mortgage loan officers are sought-after professionals in the mortgage lending and finance industry in the country.
Mortgage loan officers (MLOs) are required to get a specific license after fulfilling the eligibility requirements and standards established by the NMLS (Nationwide Multistate Licensing System).
Loan officers (or loan originators) work within the domain of the lending and mortgage business.
From helping clients choose the right mortgage plan to negotiating the best interest rates, loan officers are responsible for acting as the bridge between lenders and borrowers.
If you are seeking a professional path with growing career opportunities, a six-figure income, and the flexibility to work remotely, working as a mortgage loan officer might just be for you.
Embarking on a career in the mortgage and lending industry can work wonders for you professionals.
The Bureau of Labor Statistics in the U.S. has estimated that job opportunities for MLOs are going to increase steadily in the next ten years.
Plus, due to the growing demand for residential real estate in the country, skilled loan officers are going to be sought after in the job market.
However, to take your first steps into this exciting and rewarding career, you must acquaint yourself with what it takes to become a licensed mortgage loan officer.
Getting a license is the most critical requirement for all individuals who want to work with clients and assist them in choosing and securing mortgage loans.
Almost every state in the country requires applicants to complete mandatory pre-licensing education and training to become eligible for an MLO license.
If you are curious to explore more, we have put together this beginner’s guide which covers all the key aspects of becoming a licensed MLO in the U.S.
In this article, you will learn about MLO pre-licensing education, what it constitutes, and tips to clear the licensing exam.
Plus, you will also learn about the job duties of a loan officer and the ideal skill set to become a successful one.
Who needs an MLO license
According to the NMLS (Nationwide Multistate Licensing System), it is mandatory for individuals and companies working in the lending and mortgage financing industry to obtain an MLO license.
Engaging in the business of origination of loans and financial products requires individuals and companies to complete the required education and acquire the necessary skills.
Getting a mortgage loan originator license is a must for any individual, company, or institution that wants to:
- Take, accept, or reject financial mortgage applications
- Work with clients to negotiate the terms, conditions, or policies of a loan application for the gain or compensation
- Act as a source of expertise for the purpose of facilitating a financial decision
- Process loan applications independently or on behalf of a financial institution
- Extend mortgage financing terms, products, and services to clients with the goal of obtaining their business
- Show mortgage financing comparison tools or assist individuals in evaluating the most suitable mortgage plan
- Receive any monetary compensation or incentive from individuals or companies in exchange for providing any advice, options,
If you are involved in any of the above activities directly or indirectly, it means you are required to acquire a license under the Federal SAFE (Secure and Fair Enforcement) Act.
A license works as a legal certification that an individual or an institution is legally allowed to partake in the process of origination, discussion, negotiation, and facilitation of loans on their own or on behalf of a licensed loan originator.
If you are employed in any administrative, operational, or regulatory job in the mortgage and lending industry, you must obtain a MLO license by passing the SAFE MLO national test.
Before we get into the details of what it takes to earn your MLO license, let us give you an overview of the main job duties and responsibilities of a mortgage loan officer.
What are the job duties of a Mortgage Loan Officer
Many aspiring loan officers get excited by the rewarding and fulfilling prospects of working in this profile but lack a clear understanding of what is expected from them on the job.
As a MLO in the U.S., you will be responsible for managing a range of tasks as part of your job profile.
From administrative and operational to regulatory and financial duties, your day-to-day will encompass a range of tasks. Some of the most common and frequent ones are listed below.
- Meet prospective clients who are looking to finance their home
- Interview potential clients and individuals looking for advice and consultation
- Build and establish a local presence as an independent mortgage loan officer or someone working for a financial company
- Collect required documents such as income stubs, credit reports, tax statements, and any other financial documents from prospective clients
- Assess the financial health to determine the creditworthiness of individuals
- Updating and maintaining records of transactions and loan-related documents
- Act as the go-to professional for answering any queries or clarifying any doubts
- Counsel clients to understand the pros and cons of various financial mortgage plans, terms, and products
- Educate clients to choose the most feasible and affordable mortgage loan plan based on their needs and requirements
- Assist clients in completing the loan application along with the required paperwork
- Liaison with underwriters, appraisers, and brokers to facilitate the loan process
- Review the status of the loan application and provide timely updates to clients
- Ensure full compliance with the state, federal, and NMLS guidelines and regulations
To become a successful mortgage loan officer in the U.S., you need to work on getting the right education and developing the required skills for the job.
Being good at finance, accounting, and business administration is a must to ensure smooth and timely completion of the job duties.
Having knowledge of conventional industry terms and fundamental concepts is critical to doing your job.
Additionally, the job profile will require you to have strong interpersonal skills and clear written and verbal communication ability to work with clients and industry professionals.
Next, let us give you a deep dive into how the MLO licensing process works in the U.S.
General MLO licensing requirements
Want to work as a licensed mortgage loan originator in the U.S.?
Here’s a checklist of the basic statutory requirements to qualify for the job.
- You should be at least 18 years of age or older
- You must be a legal resident of the United States or a lawfully admitted alien
- You should have a bachelor's degree in finance, accounting, or related field
Under the Secure and Fair Enforcement Mortgage Licensing Act of 2008, every state in the country must follow and adhere to a predetermined process and standard for MLO licensing.
As per the NMLS (Nationwide Multistate Licensing System), all aspiring MLOs must complete mandatory pre-licensing education to qualify for a license.
In order to become eligible for an MLO license in the U.S., you must complete NMLS-approved 20 hours of pre-licensing education which must include the following courses.
- Federal Laws (3 hours)
- Ethics, Fraud, and Consumer Rights Protection (3 hours)
- Non-Traditional Mortgage Lending (2 hours)
- General Electives (10 hours)
Some states require applicants to complete additional course credits to learn about state-specific laws and regulations for mortgage loan originators.
Thus, it is recommended that you visit the NMLS website to learn about the state specific-educational requirements.
Completing pre-licensing education is not merely a mandatory licensing requirement to tick off the checklist to become a licensed MLO - it is a preparatory course that will give you the knowledge and skills needed to learn the workings of the industry.
Be it the state and federal laws or industry-specific rules and regulations, completing pre-licensing education is essential if you wish to build a thriving, successful career.
As you prepare yourself to complete the mortgage pre-licensing course in your state, you can choose to join an in-person, real estate classroom or enroll in an online, virtual course.
Many students prefer the flexibility of learning in a live class where they can participate from anywhere without having to physically be present in a specific location.
There also exist hybrid classes that allow students to take advantage of all the lessons, course materials, and learning resources.
Passing the MLO licensing exam
Once you complete the pre-licensing education, you will have to take the SAFE MLO licensing exam in your state.
The purpose of the exam is to evaluate your knowledge of the rules, regulations, and practices of working in the mortgage lending industry.
Plus, the exam also tests your understanding of state-specific rules and regulations.
The exam is divided into state and national-specific portions and consists of 120 multiple-choice questions. You will get a total of 190 minutes to tackle all the questions.
In order to clear the test, you must pass both the state and national-specific portions of the test.
Many students often wonder how difficult it is to pass the SAFE MLO national test - while the answer depends on your knowledge and confidence, it is a difficult test to pass.
To boost your preparation, it is important to invest in high-quality education and make use of exam-prep course materials such as mock tests and sample questions.
Students should choose a comprehensive exam preparation course that offers a diverse mix of professional lessons, practice tests, assessment exams, and doubt-clearing sessions.
If you intend to work as a licensed loan originator in your state, it is recommended that you enroll in the best mortgage loan originator course to maximize your learning and preparation.
A Career as a Mortgage Loan Officer
Is finance your area of interest and do you like numbers and analysis?
Do you have a desire to help people achieve their home ownership dreams?
If yes, then working as a MLO might just be a great fit for your career goals.
If you want to enjoy a flexible, high-paying, and in-demand career path, then working as a mortgage loan officer can be a rewarding and satisfying profession for you.
It is estimated that you can make around $110K to $170K in annual salary as a skilled loan officer in the U.S.
Depending on where you live and work, there can be additional opportunities for making commissions worth $30K to $40K every year.
Plus, there are growth opportunities in this profession as you progress in your career.
Once you expand your knowledge and gain relevant experience, you can become an independent consultant or choose to start your own mortgage firm.
Another advantage of working in this career is a healthy work-life balance and the flexibility to work remotely if your employer allows for the same.